UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 or 15(d) of the
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): October 9, 2002
USA INTERACTIVE
(Exact name of Registrant as specified in charter)
Delaware 0-20570 59-2712887
(State or other jurisdiction (Commission File (IRS Employer
of incorporation) Number) Identification No.)
152 West 57th Street, New York, NY 10019
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(212) 314-7300
ITEM 5. OTHER EVENTS AND REGULATION FD DISCLOSURE
USA Interactive, a Delaware corporation (the "Company"), announced on
October 10, 2002 that it had entered into an Agreement and Plan of Merger, dated
as of October 9, 2002 (the "Merger Agreement"), by and among the Company, T
Merger Corp., a Delaware corporation ("Sub"), and Ticketmaster, a Delaware
corporation and majority owned subsidiary of the Company ("Ticketmaster").
Pursuant to the Merger Agreement, (a) Sub will be merged with and into
Ticketmaster, with Ticketmaster surviving as a wholly owned subsidiary of the
Company (the "Merger"), and (b) each share of Class A common stock, par value
$0.01 per share, of Ticketmaster and share of Class B common stock, par value
$0.01 per share, of Ticketmaster (in each case, other than (i) shares held by
the Company or any wholly owned subsidiary of the Company, (ii) shares held by
Ticketmaster or any wholly owned subsidiary of Ticketmaster, and (iii) shares of
Class A common stock held by Ticketmaster stockholders that validly perfect
appraisal rights under Delaware law) will be automatically converted in the
Merger into 0.935 of a share of common stock, par value $0.01 per share, of the
Company. The foregoing description of the Merger Agreement and the transactions
contemplated thereby, including the Merger, is qualified in its entirety by
reference to the Merger Agreement, a copy of which is attached as Exhibit 2.1
and hereby incorporated by reference herein. A copy of the joint press release
issued by the Company and Ticketmaster is attached as Exhibit 99.1 hereto, and
hereby incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(c) Exhibits.
2.1 Agreement and Plan of Merger, dated as of October 9, 2002, by and
among USA Interactive, T Merger Corp. and Ticketmaster.
99.1 Joint Press Release issued by USA Interactive and Ticketmaster.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
USA INTERACTIVE
By: /s/ Julius Genachowski
----------------------------
Name: Julius Genachowski
Title: Executive Vice President
Date: October 10, 2002
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
2.1 Agreement and Plan of Merger, dated as of October 9,
2002, by and among USA Interactive, T Merger Corp. and
Ticketmaster.
99.1 Joint Press Release issued by USA Interactive and
Ticketmaster.
Exhibit 2.1
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AGREEMENT AND PLAN OF MERGER
BY AND AMONG
USA INTERACTIVE
T MERGER CORP.
AND
TICKETMASTER
AS OF OCTOBER 9, 2002
================================================================================
TABLE OF CONTENTS
PAGE
ARTICLE 1 THE MERGER.....................................................1
Section 1.1. The Merger...............................................1
Section 1.2. Effective Time of the Merger.............................1
Section 1.3. Closing..................................................2
Section 1.4 Effects of the Merger....................................2
Section 1.5. Certificate of Incorporation and Bylaws of Surviving
Corporation; Directors and Officers......................................2
Section 1.6. Exchange of Embedded Shares for Company Preferred Stock..2
ARTICLE 2 EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES..............3
Section 2.1. Effect of Merger on Capital Stock........................3
Section 2.2. Exchange of Certificates.................................4
Section 2.3. Stock Compensation Awards................................7
Section 2.4. Further Assurances.......................................8
Section 2.5. Company Warrants.........................................9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE COMPANY...................9
Section 3.1. Organization and Qualification...........................9
Section 3.2. Capitalization..........................................10
Section 3.3. Authority Relative to this Agreement; Board Approval....10
Section 3.4. No Conflict; Required Filings and Consents..............11
Section 3.5. Compliance with Laws....................................12
Section 3.6. SEC Filings; Financial Statements.......................12
Section 3.7. Registration Statement; Information Statement...........13
Section 3.8. Brokers.................................................14
Section 3.9. Opinion of Financial Advisor............................14
Section 3.10. Employee Benefit Plans..................................14
Section 3.11. Tax Matters.............................................15
Section 3.12. Litigation..............................................15
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB...............15
Section 4.1. Organization and Qualification..........................15
Section 4.2. Capitalization..........................................16
Section 4.3. Authority Relative to this Agreement; Board Approval....16
Section 4.4. No Conflict; Required Filings and Consents..............17
Section 4.5. Compliance with Laws....................................18
Section 4.6. SEC Filings; Financial Statements.......................18
Section 4.7. Registration Statement; Information Statement...........19
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Section 4.8. Brokers.................................................19
Section 4.9. Interim Operations of Sub...............................19
Section 4.10. Tax Matters.............................................19
Section 4.11. Litigation..............................................19
Section 4.12. Ownership of Company Common Stock.......................20
ARTICLE 5 CONDUCT AND TRANSACTIONS PRIOR TO EFFECTIVE TIME;
ADDITIONAL AGREEMENTS..........................................20
Section 5.1. Information and Access..................................20
Section 5.2. Conduct of Business of the Company......................20
Section 5.3. Conduct of Business of Parent...........................22
Section 5.4. Preparation of S-4 and Information Statement;
Other Filings...........................................22
Section 5.5. Written Consent.........................................23
Section 5.6. Agreements to Take Reasonable Action....................24
Section 5.7. Consents................................................24
Section 5.8. NASDAQ Quotation........................................24
Section 5.9. Affiliates..............................................24
Section 5.10. Indemnification.........................................25
Section 5.11. Notification of Certain Matters.........................26
Section 5.12. Employee Agreements.....................................26
Section 5.13. Reorganization..........................................26
Section 5.14. Public Announcements....................................26
Section 5.15. Stockholder Litigation..................................26
Section 5.16. Section 16b-3...........................................27
ARTICLE 6 CONDITIONS PRECEDENT...........................................27
Section 6.1. Conditions to Each Party's Obligation
to Effect the Merger....................................27
Section 6.2. Conditions of Obligations of Parent and Sub.............28
Section 6.3. Conditions of Obligations of the Company................28
ARTICLE 7 TERMINATION....................................................29
Section 7.1. Termination.............................................29
Section 7.2. Effect of Termination...................................30
Section 7.3. Fees and Expenses.......................................30
ARTICLE 8 GENERAL PROVISIONS.............................................30
Section 8.1. Amendment...............................................30
Section 8.2. Extension; Waiver.......................................30
Section 8.3. Nonsurvival of Representations,
Warranties and Agreements...............................30
Section 8.4. Entire Agreement........................................30
Section 8.5. Severability............................................31
Section 8.6. Notices.................................................31
Section 8.7. Headings; Interpretation................................32
Section 8.8. Counterparts............................................32
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Section 8.9. Benefits; Assignment....................................32
Section 8.10. Governing Law...........................................32
EXHIBIT A Certificate of Incorporation of Ticketmaster
EXHIBIT B Form of Certificate of Designations
EXHIBIT C Form of Company Affiliate Letter
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INDEX OF DEFINED TERMS
TERM SECTION
"Agreement"................................................ Preamble
"Approved Matter".......................................... Section 3.1
"Blue Sky Laws"............................................ Section 4.4(b)
"Business Day"............................................. Section 1.3
"Certificate of Merger".................................... Section 1.2
"Certificates"............................................. Section 2.2(b)
"Closing".................................................. Section 1.3
"Closing Date"............................................. Section 1.3
"Code"..................................................... Recitals
"Common Shares Trust"...................................... Section 2.2(e)(iii)
"Company".................................................. Preamble
"Company Banker"........................................... Section 3.8
"Company Benefit Plans".................................... Section 3.10(a)
"Company Class A Common Stock"............................. Recitals
"Company Class B Common Stock"............................. Recitals
"Company Class C Common Stock"............................. Section 3.2
"Company Common Stock"..................................... Recitals
"Company Disclosure Letter"................................ Section 3.2
"Company Material Adverse Effect".......................... Section 3.1
"Company Option"........................................... Section 2.3(a)
"Company Preferred Stock".................................. Section 1.6
"Company SEC Reports"...................................... Section 3.6(a)
"Company Warrants"......................................... Section 2.5
"Constituent Corporations"................................. Section 1.1
"Covered Persons".......................................... Section 5.10(c)
"Delaware Statute"......................................... Recitals
"Dissenting Shares"........................................ Section 2.2(g)
"D&O Insurance"............................................ Section 5.10(c)
"Effective Time"........................................... Section 1.2
"Embedded Shares".......................................... Section 3.2
"ERISA".................................................... Section 3.10(a)
"ERISA Plan"............................................... Section 3.10(a)
"Excess Shares"............................................ Section 2.2(e)(ii)
"Exchange Act"............................................. Section 3.4(b)
"Exchange Agent"........................................... Section 2.2(a)
"Exchange Fund"............................................ Section 2.2(a)
"Exchange Ratio"........................................... Section 2.1(c)
"GAAP"..................................................... Section 3.6(b)
"Governmental Entity"...................................... Section 3.4(b)
"Information Statement".................................... Section 5.4
"Merger"................................................... Recitals
"Merger Consideration"..................................... Section 2.1(c)
"Multiemployer Plan"....................................... Section 3.10(a)
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"NASD"..................................................... Section 2.2(e)(iii)
"Other Filings" ........................................... Section 5.4
"Parent"................................................... Preamble
"Parent Banker"............................................ Section 4.8
"Parent Class B Common Stock".............................. Section 4.2
"Parent Common Stock"...................................... Section 2.1(c)
"Parent Disclosure Letter"................................. Section 4.2
"Parent Material Adverse Effect"........................... Section 4.1
"Parent Preferred Stock"................................... Section 4.2
"Parent Proxy Statement"................................... Section 4.2
"Parent SEC Reports"....................................... Section 4.6(a)
"Parent Series A Preferred Stock".......................... Section 4.2
"Restricted Stock Award"................................... Section 2.3(b)
"S-4"...................................................... Section 3.7
"SEC"...................................................... Section 3.1
"Securities Act"........................................... Section 3.6(a)
"Significant Subsidiaries"................................. Section 3.1
"Special Committee"........................................ Recitals
"Stock Plans".............................................. Section 2.3(a)
"Sub"...................................................... Preamble
"Sub Common Stock"......................................... Section 2.1(a)
"subsidiary"............................................... Section 8.7
"Surviving Corporation".................................... Section 1.1
"Surviving Corporation Class B Common Stock"............... Section 2.1(a)
"Surviving Corporation Common Stock"....................... Section 2.1(b)
"Transactions"............................................. Sections 3.3(a)
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AGREEMENT AND PLAN OF MERGER
THIS AGREEMENT AND PLAN OF MERGER (this "Agreement") is dated as of
October 9, 2002, by and among USA INTERACTIVE, a Delaware corporation
("Parent"), T MERGER CORP., a Delaware corporation and a wholly owned subsidiary
of Parent ("Sub"), and TICKETMASTER, a Delaware corporation (the "Company").
RECITALS:
A. The Executive Committee of the Board of Directors of Parent and the
Boards of Directors of Sub and the Company each have approved the terms and
conditions of the business combination between Parent and the Company to be
effected by the merger of Sub with and into the Company (the "Merger"), pursuant
to the terms and subject to the conditions of this Agreement and the General
Corporation Law of the State of Delaware (the "Delaware Statute"), and each
deems the Merger advisable and in the best interests of their respective
stockholders. A Special Committee of the Board of Directors of the Company (the
"Special Committee") has determined that the Merger is fair to, and in the best
interests of, the holders of shares of Class A common stock, $.01 par value, of
the Company ("Company Class A Common Stock") and the holders of shares of Class
B common stock, $.01 par value, of the Company ("Company Class B Common Stock,"
and together with the Class A Common Stock, "Company Common Stock"), other than
Parent and its subsidiaries, and has recommended to the Board of Directors of
the Company that it approve the terms and conditions of the Merger, including
this Agreement.
B. Each of Parent, Sub and the Company desires to make certain
representations, warranties, covenants and agreements in connection with the
Merger.
C. For U.S. federal income tax purposes, it is intended that the
Merger and the transactions contemplated thereby qualify as a reorganization
under the provisions of Section 368(a) of the United States Internal Revenue
Code of 1986, as amended (the "Code").
NOW, THEREFORE, in consideration of the premises and mutual covenants
and agreements contained in this Agreement, the parties hereto agree as follows:
ARTICLE 1
THE MERGER
SECTION 1.1. THE MERGER. Upon the terms and subject to the conditions
of this Agreement and in accordance with the Delaware Statute, at the Effective
Time, Sub shall be merged with and into the Company. Following the Merger, the
Company shall continue as the surviving corporation (the "Surviving
Corporation") and the separate corporate existence of Sub shall cease. Sub and
the Company are collectively referred to as the "Constituent Corporations."
SECTION 1.2. EFFECTIVE TIME OF THE MERGER. Subject to the provisions
of this Agreement, the Merger shall become effective (the "Effective Time") upon
the filing of a properly executed certificate of merger (the "Certificate of
Merger") with the Secretary of State
of the State of Delaware in accordance with the Delaware Statute, or at such
later time as agreed to by the parties and set forth in the Certificate of
Merger.
SECTION 1.3. CLOSING. Unless this Agreement shall have been terminated
pursuant to Section 7.1, the closing of the Merger (the "Closing") will take
place at 10:00 a.m. on a date (the "Closing Date") to be mutually agreed upon by
the parties hereto, which date shall be no later than the third Business Day
after satisfaction of the latest to occur of the conditions set forth in Article
6 (other than those conditions that by their terms are to be satisfied at the
Closing), unless another date is agreed to in writing by the parties hereto. The
Closing shall take place at the offices of Wachtell, Lipton, Rosen & Katz, 51
West 52nd Street, New York, New York 10019, unless another place is agreed to in
writing by the parties hereto. "Business Day" shall mean any day, other than a
Saturday, Sunday or legal holiday on which banks are permitted to close in the
City and State of New York.
SECTION 1.4. EFFECTS OF THE MERGER. At the Effective Time: (a) the
separate existence of Sub shall cease and Sub shall be merged with and into the
Company, with the result that the Company shall be the Surviving Corporation,
and (b) the Merger shall have all of the effects provided by the Delaware
Statute.
SECTION 1.5. CERTIFICATE OF INCORPORATION AND BYLAWS OF SURVIVING
CORPORATION; DIRECTORS AND OFFICERS. At the Effective Time, (a) the Certificate
of Incorporation of the Company shall be amended so as to read in its entirety
in the form set forth as EXHIBIT A hereto, and, as so amended, until thereafter
and further amended as provided therein and under the Delaware Statute it shall
be the Certificate of Incorporation of the Surviving Corporation, (b) the Bylaws
of Sub shall become the Bylaws of the Surviving Corporation until altered,
amended or repealed as provided under the Delaware Statute or in the Certificate
of Incorporation or Bylaws of the Surviving Corporation, (c) the directors of
Sub shall become the initial directors of the Surviving Corporation, such
directors to hold office from the Effective Time until their respective
successors are duly elected or appointed as provided in the Certificate of
Incorporation and Bylaws of the Surviving Corporation, and (d) the officers of
the Company shall continue as the officers of the Surviving Corporation until
such time as their respective successors are duly elected as provided in the
Bylaws of the Surviving Corporation.
SECTION 1.6. EXCHANGE OF EMBEDDED SHARES FOR SHARES OF COMPANY
PREFERRED STOCK Prior to the Effective Time, the Company shall file with the
Secretary of State of the State of Delaware a properly executed certificate of
designations (the "Certificate of Designations") in the form set forth as
EXHIBIT B hereto designating the powers, preferences, rights and qualifications,
limitations and restrictions of the preferred stock, par value $0.01 per share,
of the Company (the "Company Preferred Stock"). Immediately prior to the
Effective Time, the Company shall cause all of the Embedded Shares to be
exchanged for one share of Company Preferred Stock.
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ARTICLE 2
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE
CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES
SECTION 2.1. EFFECT OF MERGER ON CAPITAL STOCK. At the Effective Time,
subject and pursuant to the terms of this Agreement, by virtue of the Merger and
without any action on the part of the Constituent Corporations or the holders of
any shares of capital stock of the Constituent Corporations:
(a) CAPITAL STOCK OF SUB. Each issued and outstanding share of common
stock, $.01 par value per share, of Sub ("Sub Common Stock"), shall be
converted into and exchanged for a number of validly issued, fully paid and
nonassessable shares of Class B common stock, $.01 par value per share, of
the Surviving Corporation ("Surviving Corporation Class B Common Stock"),
equal to the quotient obtained by dividing (i) the aggregate number of
shares of Company Class A Common Stock and Company Class B Common Stock
issued and outstanding immediately prior the Effective Time, excluding
shares of Company Common Stock being converted into shares of Surviving
Corporation Common Stock pursuant to Section 2.1(b) below, by (ii) 100,
rounded to the nearest whole number of shares of Surviving Corporation
Class B Common Stock.
(b) TREATMENT OF CERTAIN COMPANY SHARES. Each share of Company Common
Stock that is owned by the Company as treasury stock, and each share of
Company Common Stock that is owned by Parent or any wholly owned subsidiary
of Parent, shall be cancelled and retired and shall cease to exist. The
share of Company Preferred Stock that is owned directly or indirectly by a
wholly owned subsidiary of the Company shall be converted into and
exchanged for 92,740,544 validly issued, fully paid and nonassessable
shares of common stock, $.01 par value per share, of the Surviving
Corporation ("Surviving Corporation Common Stock").
(c) EXCHANGE RATIO FOR COMPANY COMMON STOCK. Each share of Company
Class A Common Stock and each share of Company Class B Common Stock issued
and outstanding immediately prior to the Effective Time (other than shares
of Company Class A Common Stock and shares of Company Class B Common Stock
described in Section 2.1(b) and other than Dissenting Shares), shall,
subject to Section 2.1(d), be converted into the right to receive 0.935
(the "Exchange Ratio") of a fully paid and nonassessable share of common
stock, $.01 par value per share, of Parent ("Parent Common Stock") (the
"Merger Consideration"). At the Effective Time, all such shares of Company
Common Stock shall no longer be outstanding, and shall automatically be
cancelled and retired and cease to exist, and each holder of a certificate
representing any such shares of Company Common Stock shall cease to have
any rights with respect thereto, except the right to receive the shares of
Parent Common Stock to be issued in consideration therefor upon the
surrender of such certificate in accordance with Section 2.2, without
interest. No fractional shares of Parent Common Stock shall be issued; and,
in lieu thereof, a cash payment shall be made pursuant to Section 2.2(e).
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(d) ADJUSTMENT OF EXCHANGE RATIO FOR DILUTION AND OTHER MATTERS. If,
between the date of this Agreement and the Effective Time, the outstanding
shares of Parent Common Stock shall have been changed into a different
number of shares or a different class by reason of any reclassification,
recapitalization, reorganization, split-up, stock dividend (including any
dividend or distribution of securities convertible into, or exercisable or
exchangeable for, Parent Common Stock), stock combination, exchange of
shares, readjustment or otherwise, as the case may be, then the Exchange
Ratio and the Merger Consideration shall be correspondingly adjusted.
SECTION 2.2. EXCHANGE OF CERTIFICATES.
(a) EXCHANGE AGENT. Prior to the Closing Date, Parent shall select a
bank or trust company reasonably acceptable to the Company to act as exchange
agent in the Merger (the "Exchange Agent"). Prior to the Effective Time, Parent
shall deposit with the Exchange Agent, for the benefit of the holders of shares
of Company Common Stock, for exchange in accordance with this Article 2,
certificates representing the shares of Parent Common Stock (such shares of
Parent Common Stock, together with any dividends or distributions with respect
thereto, the "Exchange Fund") issuable pursuant to Section 2.1(c) at the
Effective Time in exchange for outstanding shares of Company Common Stock, which
shall include such shares of Parent Common Stock to be sold by the Exchange
Agent pursuant to Section 2.2(e).
(b) EXCHANGE PROCEDURES. As soon as practicable after the Effective
Time (but in any event within ten Business Days after the Effective Time),
Parent shall cause the Exchange Agent to mail to each holder of record (other
than the Company, Parent, Sub and any wholly owned subsidiary of the Company) of
a certificate or certificates that immediately prior to the Effective Time
represented issued and outstanding shares of Company Common Stock (collectively,
the "Certificates") whose shares were converted into the right to receive Parent
Common Stock pursuant to Section 2.1(c), (i) a letter of transmittal (which
shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as Parent and the
Company may reasonably specify) and (ii) instructions for use in effecting the
surrender of the Certificates in exchange for certificates representing Parent
Common Stock and any cash in lieu of fractional shares of Parent Common Stock.
Upon surrender of a Certificate for cancellation to the Exchange Agent, together
with a duly executed letter of transmittal and such other documents as may be
reasonably required by the Exchange Agent, the holder of such Certificate shall
be entitled to receive in exchange therefor a certificate representing that
number of whole shares of Parent Common Stock which such holder has the right to
receive pursuant to the provisions of this Article 2 and any cash in lieu of
fractional shares of Parent Common Stock, and the Certificate so surrendered
shall forthwith be cancelled. In the event of a transfer of ownership of shares
of Company Common Stock which is not registered on the transfer records of the
Company, a certificate representing the proper number of shares of Parent Common
Stock and any cash in lieu of fractional shares of Parent Common Stock may be
issued and paid to a transferee if the Certificate representing such Company
Common Stock is presented to the Exchange Agent, accompanied by all documents
required to evidence and effect such transfer and by evidence that any
applicable stock transfer taxes have been paid. Until surrendered as
contemplated by this Section 2.2, each Certificate shall be deemed, from and
after the Effective Time, to represent only the right to receive upon such
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surrender the certificate representing shares of Parent Common Stock and cash in
lieu of any fractional shares of Parent Common Stock as contemplated by this
Article 2 and the Delaware Statute. The consideration to be issued in the Merger
will be delivered by the Exchange Agent as promptly as practicable following
surrender of a Certificate and any other required documents. No interest will be
payable on such consideration, regardless of any delay in making payments.
(c) DISTRIBUTIONS WITH RESPECT TO UNSURRENDERED CERTIFICATES. No
dividends or other distributions declared or made after the Effective Time with
respect to Parent Common Stock with a record date after the Effective Time shall
be paid to the holder of any unsurrendered Certificate with respect to the
shares of Parent Common Stock represented thereby, and no cash payment in lieu
of fractional shares shall be paid to any such holder pursuant to Section 2.2(e)
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect, if any, of applicable laws, following surrender of any
such Certificate, there shall be paid to the record holder of the certificates
representing whole shares of Parent Common Stock issued in exchange therefor or
such holder's transferee pursuant to Section 2.2(e), without interest, (i) at
the time of such surrender, the amount of any cash payable in lieu of a
fractional share of Parent Common Stock to which such holder is entitled
pursuant to Section 2.2(e) and the amount of dividends or other distributions on
Parent Common Stock with a record date after the Effective Time theretofore paid
with respect to such whole shares of Parent Common Stock, and (ii) at the
appropriate payment date, the amount of dividends or other distributions on
Parent Common Stock with a record date after the Effective Time but prior to
surrender and a payment date subsequent to surrender payable with respect to
such whole shares of Parent Common Stock.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. All shares of
Parent Common Stock issued upon the surrender for exchange of shares of Company
Common Stock in accordance with the terms of this Article 2 (plus any cash paid
pursuant to Section 2.2(c) or 2.2(e)) shall be deemed to have been issued (and
paid) in full satisfaction of all rights pertaining to such shares of Company
Common Stock. From and after the Effective Time, the stock transfer books of the
Company shall be closed with respect to the shares of Company Common Stock, and
there shall be no further registration of transfers on the stock transfer books
of the Company or the Surviving Corporation of the shares of Company Common
Stock that were outstanding immediately prior to the Effective Time. If, after
the Effective Time, Certificates are presented to the Surviving Corporation for
any reason, they shall be cancelled and exchanged as provided in this Article 2.
(e) NO ISSUANCE OF FRACTIONAL SHARES.
(i) No certificates or scrip for fractional shares of Parent
Common Stock shall be issued upon the surrender for exchange of
Certificates, and such fractional share interests will not entitle the
owner thereof to vote or to any rights of a stockholder of Parent.
(ii) As promptly as practicable following the Effective Time, the
Exchange Agent shall determine the excess of (A) the number of full shares
of Parent Common Stock delivered to the Exchange Agent by Parent pursuant
to Section 2.2(a) over (B) the aggregate number of full shares of Parent
Common Stock to be distributed to holders of Company Common Stock pursuant
to Section 2.2(b) (such excess, the "Excess
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Shares"). As soon after the Effective Time as practicable, the Exchange
Agent, as agent for the holders of Company Common Stock, shall sell the
Excess Shares at then prevailing prices in the over-the-counter market, all
in the manner provided in clause (iii) of this Section 2.2(e).
(iii) The sale of the Excess Shares by the Exchange Agent shall
be executed in the over-the-counter market through one or more member firms
of the National Association of Securities Dealers, Inc. (the "NASD") and
shall be executed in round lots to the extent practicable. Until the net
proceeds of such sale or sales have been distributed to the holders of
Company Common Stock, the Exchange Agent will hold such proceeds in trust
for the holders of Company Common Stock (the "Common Shares Trust"). Parent
shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent incurred in connection with such sale of the Excess Shares. The
Exchange Agent shall determine the portion of the Common Shares Trust to
which each holder of Company Common Stock shall be entitled, if any, by
multiplying the amount of the aggregate net proceeds comprising the Common
Shares Trust by a fraction, the numerator of which is the amount of the
fractional share interest to which such holder of Company Common Stock is
entitled and the denominator of which is the aggregate amount of fractional
share interests to which all holders of Company Common Stock are entitled.
(iv) As soon as practicable after the determination of the amount
of cash, if any, to be paid to the holders of Company Common Stock in lieu
of any fractional share interests and subject to clause (v) of this Section
2.2(e), the Exchange Agent shall make available such amounts to such
holders of Company Common Stock.
(v) Parent or the Exchange Agent shall be entitled to deduct and
withhold from the consideration otherwise payable pursuant to this
Agreement to any holder of shares of Company Common Stock such amounts as
Parent or the Exchange Agent is required to deduct and withhold with
respect to the making of such payment under the Code, or any provision of
state, local or foreign tax law. To the extent that amounts are so withheld
by Parent or the Exchange Agent, such withheld amounts shall be treated for
all purposes of this Agreement as having been paid to the holder of the
shares of Company Common Stock in respect of which such deduction and
withholding was made by Parent or the Exchange Agent.
(f) TERMINATION OF EXCHANGE FUND. Any portion of the Exchange Fund and
Common Shares Trust that remains undistributed to the stockholders of the
Company for 12 months after the Effective Time shall be delivered to Parent,
upon demand, and any former stockholders of the Company that have not
theretofore complied with this Article 2 shall thereafter look only to Parent
for payment of their claim for Parent Common Stock, any cash in lieu of
fractional shares of Parent Common Stock and any dividends or distributions with
respect to Parent Common Stock.
(g) DISSENTING SHARES. Notwithstanding anything to the contrary in
this Agreement, shares of Company Class A Common Stock which are outstanding
immediately prior to the Effective Time and are held by stockholders who have
not voted in favor of the
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Merger or consented thereto in writing and who have demanded appraisal rights
with respect thereto in accordance with Section 262 of the Delaware Statute (the
"Dissenting Shares") shall not be converted into or be exchangeable for the
right to receive shares of Parent Common Stock in accordance with Section
2.1(c), but holders of such shares shall be entitled to receive payment of the
appraised value of such shares in accordance with the provisions of such Section
262, except that any Dissenting Shares held by a stockholder who shall
thereafter withdraw such demand for appraisal of such shares or lose the right
to appraisal as provided in Section 262 shall thereupon be deemed to have been
converted into and to have become exchangeable for, at the Effective Time, the
Merger Consideration, without any interest thereon. The Company shall give
Parent (i) prompt notice of any written demands for appraisal of any shares of
Company Class A Common Stock, attempted withdrawals of such demands, and any
other instruments served pursuant to the Delaware Statute received by the
Company relating to stockholders' rights of appraisal, and (ii) the opportunity
to direct all negotiations and proceedings with respect to demands for
appraisals under the Delaware Statute. The Company shall not, except with the
prior written consent of Parent, voluntarily make any payment with respect to
any demands for appraisals of Company Class A Common Stock, offer to settle or
settle any such demands or approve any withdrawal of any such demands. All
payments to holders of Dissenting Shares shall be paid by the Company out of its
own funds, and no funds shall be supplied directly or indirectly by Parent for
that purpose.
(h) NO LIABILITY. Neither the Exchange Agent, Parent, Sub nor the
Company shall be liable to any holder of shares of Company Common Stock or
Parent Common Stock, as the case may be, for shares (or dividends or
distributions with respect thereto) from the Exchange Fund or cash from the
Common Shares Trust delivered to a public official pursuant to any applicable
abandoned property, escheat or similar law.
(i) LOST, STOLEN OR DESTROYED CERTIFICATES. In the event any
Certificates shall have been lost, stolen or destroyed, the holder of such lost,
stolen or destroyed Certificates shall execute an affidavit of that fact upon
request. The holder of any such lost, stolen or destroyed Certificates shall
also deliver a reasonable indemnity against any claim that may be made against
Parent or the Exchange Agent with respect to the Certificates alleged to have
been lost, stolen or destroyed. The affidavit and any indemnity that may be
required hereunder shall be delivered to the Exchange Agent, who shall be
responsible for making payment for such lost, stolen or destroyed
Certificate(s).
SECTION 2.3. STOCK COMPENSATION AWARDS.
(a) At the Effective Time, the Company's obligation with respect to
each option (each, a "Company Option") to purchase shares of Company Common
Stock issued pursuant to the Company's 1999 Stock Plan, 1998 Stock Option Plan,
1996 Stock Option Plan and the TicketWeb, Inc. 2000 Stock Plan, as amended
(collectively, the "Stock Plans") that is outstanding immediately prior to the
Effective Time, shall be assumed by Parent. The Company Options so assumed by
Parent shall continue to have, and be subject to, the same terms and conditions
as set forth in the applicable Stock Plan and the agreements pursuant to which
such Company Options were issued as in effect immediately prior to the Effective
Time, which Stock Plan and agreements shall be assumed by Parent, except that
(in accordance with the applicable provisions of such Stock Plan) (a) each such
Company Option shall be exercisable for that
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number of shares of Parent Common Stock equal to the product of (i) the number
of shares of Company Common Stock subject to such Company Option immediately
prior to the Effective Time and (ii) the Exchange Ratio, rounded to the nearest
whole number of shares of Parent Common Stock, and (b) the exercise price per
share of Parent Common Stock shall be equal to the quotient of (x) the exercise
price per share of Company Common Stock immediately prior to the Effective Time
and (y) the Exchange Ratio. The adjustment provided herein with respect to any
Company Options that are "Incentive Stock Options" (as defined in Section 422 of
the Code) shall be and is intended to be effected in a manner that is consistent
with Section 424(a) of the Code. Parent shall reserve for issuance the number of
shares of Parent Common Stock that will become issuable upon the exercise of
such Company Options pursuant to this Section 2.3.
(b) At the Effective Time, the Company's obligation with respect to
each award of Company Common Stock granted under the Stock Plans that is subject
to restrictions on vesting or transfer or subject to a repurchase right (each, a
"Restricted Stock Award") that is outstanding immediately prior to the Effective
Time shall be assumed by Parent. The Restricted Stock Awards so assumed by
Parent shall continue to have, and be subject to, the same terms and conditions
as set forth in the applicable Stock Plan and the agreements pursuant to which
such Restricted Stock Awards were issued as in effect immediately prior to the
Effective Time, which Stock Plans and agreements shall be assumed by Parent,
except that (in accordance with the applicable provisions of such Stock Plan)
each Restricted Stock Award shall be converted into a number of shares of Parent
Common Stock equal to the product of (i) the number of shares of Company Common
Stock subject to such Restricted Stock Award immediately prior to the Effective
Time and (ii) the Exchange Ratio, rounded to the nearest whole number of shares
of Parent Common Stock.
(c) Promptly following the Effective Time (and in any event not later
than 2 Business Days following the Effective Time), Parent shall file a
registration statement on Form S-8 (or any successor or, including if Form S-8
is not available, other appropriate forms) with respect to the shares of Parent
Common Stock subject to such options or restricted stock awards assumed by
Parent in accordance with Sections 2.3(a) and (b) and shall maintain the
effectiveness of such registration statement or registration statements (and
maintain the current status of the prospectus or prospectuses contained therein)
for so long as such options or restricted stock awards remain outstanding.
(d) All stock options and restricted stock awards previously granted
to directors, officers, employees and consultants of the Company and its
subsidiaries under stock plans of Parent and outstanding immediately prior to
the Effective Time will, upon completion of the Merger, remain outstanding and
in full force and effect, subject to their existing terms and conditions.
SECTION 2.4. FURTHER ASSURANCES. If, at any time after the Effective
Time, any such further action is necessary or desirable to carry out the
purposes of this Agreement, or to vest, perfect or confirm of record or
otherwise establish in the Surviving Corporation full right, title and interest
in, to or under any of the assets, property, rights, privileges, powers and
franchises of the Company and Sub, the officers and directors of the Surviving
Corporation are fully authorized in the name and on behalf of each of the
Constituent Corporations or otherwise to take all such lawful and reasonably
necessary or desirable action.
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SECTION 2.5. COMPANY WARRANTS. To the extent expressly required by the
terms of any warrant to acquire shares of Company Common Stock (each, a "Company
Warrant"), at the Effective Time, the Company's obligation with respect to each
such Company Warrant outstanding and unexercised immediately prior to the
Effective Time shall be assumed by Parent. The Company Warrants so assumed by
Parent shall continue to have, and be subject to, the same terms and conditions
as set forth in the applicable warrant agreements as in effect immediately prior
to the Effective Time, except that (in accordance with, and without duplication
of, the provisions set forth in the applicable warrant agreement) (a) each such
Company Warrant shall be exercisable solely for a number of shares of Parent
Common Stock equal to the product of (i) the number of shares of Company Common
Stock subject to such Company Warrant immediately prior to the Effective Time
and (ii) the Exchange Ratio, rounded to the nearest whole number of shares of
Parent Common Stock, and (b) the exercise price with respect to each such
Company Warrant shall be appropriately adjusted.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to Parent and Sub as follows:
SECTION 3.1. ORGANIZATION AND QUALIFICATION. Each of the Company and
its "Significant Subsidiaries" (as defined in Regulation S-X promulgated by the
Securities and Exchange Commission (the "SEC") and which are referred to herein
as the "Significant Subsidiaries") is a corporation or other entity duly
incorporated or organized, validly existing and, as applicable, in good standing
under the laws of the jurisdiction of its incorporation or organization, and has
the requisite corporate or other power and authority to own, lease and operate
its assets and properties and to carry on its business as it is now being
conducted. Each of the Company and its Significant Subsidiaries is in possession
of all franchises, grants, authorizations, licenses, permits, easements,
consents, certificates, approvals and orders necessary to own, lease and operate
the properties it purports to own, operate or lease and to carry on its business
as it is now being conducted, except where the failure to have such franchises,
grants, authorizations, licenses, permits, easements, consents, certificates,
approvals and orders would not, individually or in the aggregate, have a Company
Material Adverse Effect. Each of the Company and its subsidiaries is, as
applicable, duly qualified or licensed as a foreign corporation to do business,
and is in good standing, in each jurisdiction where the character of the
properties owned, leased or operated by it or the nature of its business makes
such qualification or licensing necessary, except for such failures to be so
duly qualified or licensed and in good standing that would not, either
individually or in the aggregate, have a Company Material Adverse Effect.
"Company Material Adverse Effect" shall mean any change, event or effect that is
materially adverse to the business, financial condition or results of operations
of the Company and its subsidiaries taken as a whole, excluding (i) any changes
or effects resulting from any matter, which matter was expressly approved by the
Board of Directors of the Company following the date hereof unless, with respect
to such matter, the directors of the Company who are also executive officers of
Parent either voted against or abstained from voting (such matter and related
contemplated transactions, an "Approved Matter"), (ii) changes in economic or
regulatory conditions in the industries in which the Company carries on business
as of the date hereof, and changes in general economic, regulatory or political
conditions, including,
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without limitation, acts of war or terrorism, and (iii) changes resulting from
the announcement of the Transactions and any other public announcement of Parent
during the term of this Agreement to the extent not covered in any other public
announcement of the Company during the term of this Agreement or based upon
information provided to Parent by the Company. Other than wholly owned
subsidiaries and except as disclosed in the Company SEC Reports or Section 3.1
of the Company Disclosure Letter, the Company does not directly or indirectly
own any equity or similar interest in, or any interest convertible or
exchangeable or exercisable for any equity or similar interest in, any
corporation, partnership, limited liability company, joint venture or other
business, association or entity.
SECTION 3.2. CAPITALIZATION. The authorized capital stock of the
Company consists solely of 150,000,000 shares of Company Class A Common Stock,
250,000,000 shares of Company Class B Common Stock, 2,883,506 shares of Class C
common stock, par value $.01 per share, of the Company ("Company Class C Common
Stock"), none of which have been issued at any time on or prior to the date
hereof, and 2,000,000 shares of Company Preferred Stock, none of which have been
issued at any time on or prior to the date hereof. At the close of business on
September 30, 2002, (a) 42,722,393 shares of Company Class A Common Stock and
101,281,810 shares of Company Class B Common Stock were issued and outstanding,
(b) no shares of Company Common Stock were held in treasury by the Company, and
(c) 42,480,143 shares of Company Class A Common Stock and 50,260,401 shares of
Company Class B Common Stock (collectively, the "Embedded Shares") were held by
wholly owned subsidiaries of the Company. All shares of Company Common Stock
that are issued and outstanding on the date hereof are duly authorized, validly
issued and fully paid and nonassessable. Except as set forth in this Section 3.2
or as disclosed in Section 3.2 of the disclosure letter delivered by the Company
to Parent on or prior to the date hereof (the "Company Disclosure Letter"), as
of September 30, 2002, there are no options, warrants, rights, puts, calls,
commitments, or other contracts, arrangements or understandings issued by or
binding upon the Company requiring or providing for, and there are no
outstanding debt or equity securities of the Company which upon the conversion,
exchange or exercise thereof would require or provide for the issuance by the
Company of any new or additional shares of Company Common Stock, Company Class C
Common Stock or Company Preferred Stock (or any other securities of the Company)
which, with or without notice, lapse of time and/or payment of monies, are or
would be convertible into or exercisable or exchangeable for shares of Company
Common Stock, Company Class C Common Stock or Company Preferred Stock (or any
other securities of the Company). Since September 30, 2002, the Company has not
issued any shares of its capital stock or any securities convertible into or
exercisable for any shares of its capital stock, other than pursuant to the
exercise of employee stock options granted prior to such date or in connection
with the conversion, if any, of shares of Company Class A Common Stock into
shares of Company Class B Common Stock. There are no preemptive or other similar
rights available to the existing holders of Company Common Stock.
SECTION 3.3. AUTHORITY RELATIVE TO THIS AGREEMENT; BOARD APPROVAL.
(a) The Company has all necessary corporate power and authority to
execute and deliver this Agreement and to perform its obligations hereunder and,
subject to obtaining the approval of the stockholders of the Company of this
Agreement, to consummate the transactions
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contemplated by this Agreement (the "Transactions"). The execution and delivery
of this Agreement by the Company and the consummation by the Company of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of the Company and no other corporate proceedings on the part
of the Company are necessary to authorize this Agreement or to consummate the
Transactions (other than, with respect to the Merger, the approval of this
Agreement by the holders of a majority of the voting power of Company Class A
Common Stock and Company Class B Common Stock, voting together as a single
class, which approval is the only approval required to consummate the
Transactions under the Company's Certificate of Incorporation and the Delaware
Statute). This Agreement has been duly and validly executed and delivered by the
Company and, assuming the due authorization, execution and delivery by Parent
and Sub, constitutes the legal and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and (ii) the availability of
specific performance or injunctive relief and other equitable remedies.
(b) The Board of Directors of the Company, based on the recommendation
of the Special Committee (which recommendation was a condition to the approval
of the Company's Board of Directors set forth in clause (i) of this sentence)
has, prior to the execution of this Agreement, (i) approved this Agreement and
the Transactions (including for purposes of Section 144 of the Delaware
Statute), (ii) determined that the Transactions are fair to and in the best
interests of its public stockholders, and (iii) recommended that the
stockholders of the Company approve this Agreement and the Transactions. This
Agreement and the Transactions have been approved by the unanimous vote of the
members of the Special Committee and the unanimous vote of the members of the
Board of Directors of the Company, excluding the directors of the Company that
are also directors or officers of Parent.
SECTION 3.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by the Company do
not, and the performance of its obligations hereunder and the consummation of
the Transactions by the Company will not, (i) conflict with or violate the
Certificate of Incorporation, Bylaws or equivalent organizational documents of
the Company or any of its Significant Subsidiaries; (ii) subject to obtaining
the approval of the Company's stockholders of this Agreement in accordance with
the Delaware Statute and the Company's Certificate of Incorporation and Bylaws
and compliance with the requirements set forth in Section 3.4(b), conflict with
or violate any law, rule, regulation, order, judgment or decree applicable to
the Company or any of its subsidiaries or by which any of their respective
properties is bound or affected; or (iii) except as set forth in Section 3.4 of
the Company Disclosure Letter, result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or alter the rights or obligations of any third party or the Company or
its subsidiaries under, or give to others any rights of termination, amendment,
acceleration, increased payments or cancellation of, or result in the creation
of a lien or other encumbrance on any of the properties or assets of the Company
or any of its subsidiaries pursuant to, any note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries or any of their respective
properties are bound or affected, in each case having value
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or requiring payments over the term thereof equal to or greater than $2.5
million, except, in the case of clause (ii) above, for any such conflicts or
violations that would not prevent or delay consummation of the Merger in any
material respect, or otherwise prevent the Company from performing its
obligations under this Agreement in any material respect, and would not have,
individually or in the aggregate, a Company Material Adverse Effect. Section
3.4(a) of the Company Disclosure Letter lists all material consents, waivers and
approvals under any agreements, contracts, licenses or leases required to be
obtained by the Company or its Significant Subsidiaries in connection with the
consummation of the Transactions.
(b) The execution and delivery of this Agreement by the Company do
not, and the performance of its obligations hereunder and the consummation of
the Transactions by the Company will not, require any consent, approval,
authorization or permit of, or registration or filing with or notification to,
any court, administrative agency, commission, governmental or regulatory
authority, domestic or foreign (a "Governmental Entity"), except (i) the filing
of documents to satisfy the applicable requirements, if any, of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and state takeover laws,
(ii) the filing with the SEC of the Information Statement and prospectus in
definitive form relating to the Transactions, (iii) the filing of the
Certificate of Merger with the Secretary of State of the State of Delaware and
appropriate corresponding documents with the Secretary of State of other states
in which the Company is qualified to transact business as a foreign corporation,
(iv) filings under the rules and regulations of the NASD, and (v) where the
failure to obtain such consents, approvals, authorizations or permits, or to
make such filings or notifications (A) would not prevent or delay consummation
of the Merger in any material respect or otherwise prevent or delay in any
material respect the Company from performing its obligations under this
Agreement or (B) would not, individually or in the aggregate, have a Company
Material Adverse Effect.
SECTION 3.5. COMPLIANCE WITH LAWS.
Except as set forth in Section 3.5 of the Company Disclosure Letter,
neither the Company nor any of its subsidiaries is in conflict with, or in
default or violation of (a) any law, rule, regulation, order, judgment or decree
applicable to the Company or any of its subsidiaries or by which any of their
respective properties is bound, or (b) whether after the giving of notice or
passage of time or both, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or any of their respective properties is
bound, except for any conflicts, defaults or violations that do not and would
not have, individually or in the aggregate, a Company Material Adverse Effect.
SECTION 3.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Company has made available to Parent a correct and complete
copy of each report, schedule, registration statement (but only such
registration statements that have become effective prior to the date hereof) and
definitive proxy statement filed by the Company with the SEC on or since January
1, 2002 and prior to the date of this Agreement (the "Company SEC Reports"),
which are all the forms, reports and documents required to be filed by the
Company with the SEC since such date; PROVIDED that, if the Company amends any
of the Company SEC Reports, such amendment shall not mean or imply that any
representation or
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warranty in this Agreement was not true when made or became untrue thereafter.
As of their respective dates, the Company SEC Reports and any forms, reports and
other documents filed by the Company with the SEC after the date of this
Agreement (i) complied or will comply in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable thereto, and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of this Agreement
then on the date of such filing) or will not at the time they are filed contain
any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading, PROVIDED, HOWEVER, that no
representation is made with respect to information included in the Company SEC
Reports that was provided in writing by Parent or Sub. None of the Company's
subsidiaries is required to file any reports or other documents with the SEC.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Company SEC Reports complied
as to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, had
been prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of the unaudited
statements, as permitted by Form 10-Q or the Exchange Act regulations
promulgated by the SEC), and each fairly presented the consolidated financial
position of the Company and its consolidated subsidiaries in all material
respects as at the respective dates thereof and the consolidated results of its
operations and cash flows for the periods indicated (subject, in the case of the
unaudited interim financial statements, to normal audit adjustments which were
not and are not expected, individually or in the aggregate, to be material in
amount).
SECTION 3.7. REGISTRATION STATEMENT; INFORMATION STATEMENT. None of
the information supplied or to be supplied by the Company in writing
specifically for inclusion or incorporation by reference in (a) the registration
statement on Form S-4 to be filed with the SEC by Parent in connection with the
issuance of the Parent Common Stock in or as a result of the Merger (the "S-4")
will, at the time the S-4 is filed with the SEC and at the time it becomes
effective under the Securities Act, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary in order to make the statements made therein, in light of the
circumstances under which they were made, not misleading; and (b) the
Information Statement will, at the date the Information Statement is mailed to
the stockholders of the Company and as of the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing, the Company makes no representation or warranty
with respect to any information provided by or required to be provided by Parent
or Sub and/or by their auditors, legal counsel, financial advisors or other
consultants or advisors specifically for use in the S-4 or Information
Statement. The Information Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
promulgated by the SEC thereunder.
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SECTION 3.8. BROKERS. Other than Credit Suisse First Boston
Corporation (the "Company Banker"), no broker, finder or investment banker is
entitled to any brokerage, finders' or other fee or commission in connection
with the Merger and the other Transactions based upon arrangements made by or on
behalf of the Company. The Company heretofore has furnished to Parent a complete
copy of all agreements between the Company and the Company Banker pursuant to
which such firm would be entitled to any payment relating to the Merger and the
other Transactions.
SECTION 3.9. OPINION OF FINANCIAL ADVISOR. The Special Committee and
the Company's Board of Directors have received the written opinion, dated
October 9, 2002, of the Company Banker that, as of October 9, 2002, the Exchange
Ratio is fair to the holders of Company Common Stock (other than Parent or any
subsidiary of Parent) from a financial point of view, a copy of which opinion
has been delivered to Parent.
SECTION 3.10. EMPLOYEE BENEFIT PLANS.
(a) The Company will deliver promptly following the execution of this
Agreement a list of, and upon request thereafter, true and complete copies of,
all material pension, retirement, profit-sharing, deferred compensation, stock
option, employee stock ownership, severance pay, vacation, bonus or other
material incentive or employee benefit plans, arrangements or agreements,
whether arrived at through collective bargaining or otherwise, including,
without limitation, all "employee benefit plans" (as defined in Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended ("ERISA")),
currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by the Company or any entity required to be aggregated with the
Company pursuant to Section 414 of the Code for the benefit of current or former
employees, retirees, dependents, spouses, directors, independent contractors or
other beneficiaries and under which current or former employees, retirees,
dependents, spouses, directors, independent contractors or other beneficiaries
are eligible to participate, excluding any such plans, arrangements or
agreements that are offered or maintained by Parent (collectively, the "Company
Benefit Plans"). Any of the Company Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as an "ERISA Plan." No Company Benefit Plan is or has been a
multiemployer plan within the meaning of Section 3(37) of ERISA (a
"Multiemployer Plan").
(b) (i) Each of the Company Benefit Plans has been operated and
administered in all material respects in compliance with applicable laws,
including, but not limited to, ERISA (as defined herein) and the Code, (ii)
except as set forth on Section 3.10(b) of the Company Disclosure Letter, each of
the Company Benefit Plans intended to be "qualified" within the meaning of
Section 401(a) of the Code has received a favorable determination letter, and
there are no existing circumstances or any events that have occurred that would
be reasonably expected to affect adversely the qualified status of any such
Company Benefit Plan, (iii) no Company Benefit Plan provides benefits,
including, without limitation, death or medical benefits (whether or not
insured), with respect to current or former employees or directors of Company or
its subsidiaries beyond their retirement or other termination of service, other
than (A) coverage mandated by applicable law, (B) death benefits or retirement
benefits under any "employee pension plan" (as such term is defined in Section
3(2) of ERISA, (C) deferred compensation benefits accrued as liabilities on the
books of the Company or its subsidiaries, or (D) benefits the
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full cost of which is borne by the current or former employee or director (or
his beneficiary), and (vi) to the best knowledge of the Company there are no
pending, threatened or anticipated claims (other than routine claims for
benefits) by, on behalf of or against any of the Company Benefit Plans or any
trusts related thereto.
(c) No ERISA Plan is subject to Title IV or Section 302 of ERISA, and
no circumstances exist that could result in material liability to the Company
under Title IV or Section 302 of ERISA.
(d) Except as set forth in Section 3.10 of the Company Disclosure
Letter, as described in any Company SEC Reports or as provided under the Stock
Plans or any related agreement, neither the execution and delivery of this
Agreement nor the consummation of the Transactions (or any termination of
employment in connection with the Transactions) will (i) result in any payment
becoming due to any current or former director or employee of the Company or any
of its affiliates from the Company or any of its affiliates under any Company
Benefit Plan or otherwise, (ii) increase any benefits otherwise payable under
any Company Benefit Plan or (iii) result in any acceleration of the time of
payment or vesting of any such benefits, except for any payments or vesting
which would occur upon a termination of employment absent the consummation of
the Transactions or which arise under any plan, agreement or arrangement offered
or maintained by Parent.
SECTION 3.11. TAX MATTERS. Neither the Company nor any of its
subsidiaries has taken or agreed to take any action (including in connection
with the Transactions) that would prevent the Merger from constituting a
reorganization qualifying under the provisions of Section 368(a) of the Code.
SECTION 3.12. LITIGATION. Except as disclosed in the Company SEC
Reports or Section 3.12 of the Company Disclosure Letter, there are no claims,
actions, suits, investigations or proceedings pending or, to the best knowledge
of the Company, threatened against the Company or any of its subsidiaries,
before any court, arbitrator or administrative, governmental or regulatory
authority or body , domestic or foreign, that, individually or in the aggregate,
would, or would reasonably be anticipated to, have a Company Material Adverse
Effect.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF PARENT AND SUB
Parent and Sub jointly and severally represent and warrant to the
Company, as follows:
SECTION 4.1. ORGANIZATION AND QUALIFICATION. Each of Parent and Sub
has been duly organized and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted. Each of
Parent and Sub is duly qualified or licensed as a foreign corporation to do
business and is in good standing, in each jurisdiction where the character of
the properties owned, leased or operated by it or the nature of its business
makes such qualification or licensing necessary,
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except for such failures to be so duly licensed or qualified and in good
standing would not, individually or in the aggregate, have a Parent Material
Adverse Effect. "Parent Material Adverse Effect" shall mean any change, event or
effect that is materially adverse to the business, financial condition or
results of operations of Parent and its subsidiaries taken as a whole, in each
case excluding (i) changes in economic or regulatory conditions in the
industries in which Parent carries on business as of the date hereof, and
changes in general economic, regulatory or political conditions, including,
without limitation, acts of war or terrorism, and (ii) changes resulting from
the announcement of the Transactions and any other public announcement of the
Company during the term of this Agreement.
SECTION 4.2. CAPITALIZATION. At the close of business on September 30,
2002, (a) 390,437,524 shares of Parent Common Stock were issued and 383,835,823
shares of Parent Common Stock were outstanding (in each case excluding 508,336
restricted shares of Parent Common Stock), 64,629,996 shares of Parent Class B
Common Stock and 13,118,182 shares of Parent Preferred Stock were issued and
outstanding, in each case, except as disclosed in the Parent's proxy statement
dated March 25, 2002 (the "Parent Proxy Statement"), not subject to any
preemptive rights, and (b) 6,601,701 shares of Parent Common Stock and no shares
of Parent Class B Common Stock or Parent Preferred Stock were held in treasury
by Parent or by subsidiaries of Parent. Other than (a) options to purchase
69,311,267 shares of Parent Common Stock issued pursuant to employee benefit
plans and agreements of Parent, (b) 75,058,291 shares of Parent Common Stock
issuable upon exercise of outstanding warrants, (c) up to 25,721,925 shares of
Parent Common Stock issuable upon conversion of Parent Series A Preferred Stock,
(d) 508,336 restricted shares of Parent Common Stock, and (e) 3,778 shares of
Parent Common Stock issuable pursuant to Parent's Bonus Stock Purchase Program,
as of September 30, 2002, except in connection with this Agreement, as disclosed
in the disclosure letter delivered by Parent to the Company on or prior to the
date hereof (the "Parent Disclosure Letter"), or in connection with the
agreements described in the Parent Proxy Statement, there were no options,
warrants, puts, calls, commitment or other contracts, arrangements or
understandings issued or binding upon Parent requiring or providing for, and
there are no outstanding debt or equity securities of Parent which upon the
conversion, exchange or exercise thereof would require or provide for the
issuance by Parent of any new or additional shares of Parent Common Stock (or
any other securities of Parent) which, with or without notice, lapse of time
and/or payment of monies, are or would be convertible into or exercisable or
exchangeable for Parent Common Stock (or any other securities of Parent). Since
September 30, 2002, Parent has not issued any shares of its capital stock or any
securities convertible into or exercisable for any shares of its capital stock,
other than pursuant to the exercise of employee stock options granted prior to
such date. The authorized capital stock of Sub consists of 1,000 shares of Sub
Common Stock, of which, as of the date hereof, 100 shares of Sub Common Stock
are issued and outstanding. All of the outstanding shares of Sub Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable. The shares of Parent Common Stock to be issued in the Merger
will, upon issuance, be validly issued, fully paid, nonassessable, except as
disclosed in the Parent Proxy Statement, not subject to any preemptive rights,
and free and clear of all security interests, liens, claims, pledges or other
encumbrances of any nature whatsoever (in each case to which Parent is a party).
SECTION 4.3. AUTHORITY RELATIVE TO THIS AGREEMENT; BOARD APPROVAL.
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(a) Each of Parent and Sub has all necessary corporate power and
authority to execute and deliver this Agreement, and to perform its obligations
hereunder and to consummate the Transactions. The execution and delivery of this
Agreement by Parent and Sub and the consummation by Parent and Sub of the
Transactions have been duly and validly authorized by all necessary corporate
action on the part of Parent and Sub and no other corporate proceedings on the
part of Parent or Sub are necessary to authorize this Agreement, or to
consummate the Transactions (other than the approval of the NASD listing
application with respect to the issuance of shares of Parent Common Stock in the
Merger). This Agreement has been duly and validly executed and delivered by
Parent and Sub and, assuming the due authorization, execution and delivery by
the Company, constitutes the legal and binding obligations of Parent and Sub,
enforceable against Parent and Sub in accordance with its terms, subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting or relating to creditors rights generally and (ii) the availability of
specific performance or injunctive relief and other equitable remedies.
(b) The Executive Committee of the Board of Directors of Parent has
(i) approved this Agreement and the Transactions and (ii) determined that the
Transactions are fair to and in the best interests of the stockholders of
Parent. No vote of Parent's stockholders is required in connection with the
Transactions.
SECTION 4.4. NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance of their respective obligations hereunder and the
consummation of the Transactions by Parent and Sub will not, (i) conflict with
or violate the Certificate of Incorporation, Bylaws or equivalent organizational
documents of Parent or Sub; (ii) subject to compliance with the requirements set
forth in Section 4.4(b), conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Parent or Sub or by which their
respective properties are bound or affected; or (iii) result in any breach of or
constitute a default (or an event that with notice or lapse of time or both
would become a default) under, or alter the rights or obligations of any third
party or of Parent or Sub under, or give to others any rights of termination,
amendment, acceleration, increased payments or cancellation of, or result in the
creation of a lien or other encumbrance on any of the properties or assets of
Parent or Sub pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which Parent or Sub is a party or by which Parent or Sub or any of their
respective properties are bound or affected, except in the cases of clauses (ii)
and (iii) above, for any such conflicts, violations, breaches, defaults or other
alterations or occurrences that would not prevent or delay consummation of the
Merger in any material respect, or otherwise prevent Parent and Sub from
performing their respective obligations under this Agreement in any material
respect, and would not have, individually or in the aggregate, a Parent Material
Adverse Effect. There are no material consents, waivers, and approvals under any
agreements, contracts, licenses or leases required to be obtained by Parent or
Sub in connection with the consummation of the Transactions.
(b) The execution and delivery of this Agreement by Parent and Sub do
not, and the performance of their respective obligations hereunder and the
consummation of the Transactions by Parent and Sub will not, require any
consent, approval, authorization or permit
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of, or registration or filing with or notification to, any Governmental Entity
except (i) the filing of documents to satisfy the applicable requirements, if
any, of the Exchange Act and state takeover laws, (ii) the filing with the SEC
of the Information Statement and the declaration of effectiveness of the S-4 by
the SEC, (iii) the filing of the Certificate of Merger with the Secretary of
State of the State of Delaware and appropriate corresponding documents with the
Secretary of State of other states in which the Company is qualified to transact
business as a foreign corporation, (iv) filings under the rules and regulations
of the NASD, (v) filings under state securities laws ("Blue Sky Laws"), and (vi)
where the failure to obtain such consents, approvals, authorizations or permits,
or to make such filings or notifications (A) would not prevent or delay
consummation of the Merger in any material respect or otherwise prevent or delay
in any material respect Parent or Sub from performing their respective
obligations under this Agreement or (B) would not, individually or in the
aggregate, have a Parent Material Adverse Effect.
SECTION 4.5. COMPLIANCE WITH LAWS. Except as set forth in Section 4.5
of the Parent Disclosure Letter, neither Parent nor any of its subsidiaries is
in conflict with, or in default or violation of (a) any law, rule, regulation,
order, judgment or decree applicable to Parent or any of its subsidiaries or by
which any of their respective properties is bound, or (b) whether after the
giving of notice or passage of time or both, any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Parent or any of its subsidiaries is a party
or by which Parent or any of its subsidiaries or any of their respective
properties is bound, except for any such conflicts, defaults or violations which
do not and would not have, individually or in the aggregate, a Parent Material
Adverse Effect.
SECTION 4.6. SEC FILINGS; FINANCIAL STATEMENTS.
(a) Parent has made available to the Company a correct and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Parent with the SEC on or after January 1, 2002 and prior to
the date of this Agreement (the "Parent SEC Reports"), which are all the forms,
reports and documents required to be filed by Parent with the SEC since such
date; PROVIDED that, if Parent amends any of the Parent SEC Reports, such
amendment shall not mean or imply that any representation or warranty in this
Agreement was not true when made or became untrue thereafter. As of their
respective dates, the Parent SEC Reports and any forms, reports and other
documents filed by Parent and Sub after the date of this Agreement (i) complied
or will comply in all material respects with the requirements of the Securities
Act or the Exchange Act, as the case may be, and the rules and regulations of
the SEC thereunder applicable thereto, and (ii) did not at the time they were
filed (or if amended or superseded by a filing prior to the date of this
Agreement then on the date of such filing) or will not at the time they are
filed contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading, PROVIDED, HOWEVER,
that no representation is made with respect to information included in the
Parent SEC Reports that was provided in writing by the Company.
(b) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the Parent SEC Reports complied as
to form in all material respects with applicable accounting requirements and
with the published rules and regulations of the SEC with respect thereto, had
been prepared in accordance with GAAP applied on a
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consistent basis throughout the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Form 10-Q or the Exchange Act regulations promulgated by the SEC) and each
fairly presented the consolidated financial position of Parent and its
consolidated subsidiaries in all material respects as at the respective dates
thereof and the consolidated results of its operations and cash flows for the
periods indicated (subject, in the case of the unaudited interim financial
statements, to normal audit adjustments which were not and are not expected,
individually or in the aggregate, to be material in amount).
SECTION 4.7. REGISTRATION STATEMENT; INFORMATION STATEMENT. None of
the information supplied or to be supplied by Parent in writing specifically for
inclusion or incorporation by reference in (a) the S-4 will, at the time the S-4
is filed with the SEC and at the time it becomes effective under the Securities
Act, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading, and (b) the Information Statement will, at the date the
Information Statement is mailed to the stockholders of the Company and as of the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements made therein, in light of the circumstances under which they were
made, not misleading. Notwithstanding the foregoing, Parent and Sub make no
representation or warranty with respect to any information provided by or
required to be provided by the Company and/or its auditors, legal counsel,
financial advisors or other consultants or advisors specifically for use in the
S-4 or the Information Statement. The S-4 will comply as to form in all material
respects with the provisions of the Securities Act and the rules and regulations
promulgated by the SEC thereunder.
SECTION 4.8. BROKERS. Other than Allen & Company Incorporated (the
"Parent Banker"), no broker, finder or investment banker is entitled to any
brokerage, finder's or other fee or commission in connection with the Merger and
the other Transactions based upon arrangements made by or on behalf of Parent or
Sub.
SECTION 4.9. INTERIM OPERATIONS OF SUB. Sub is a direct wholly owned
subsidiary of Parent and was formed solely for the purpose of engaging in the
Merger, has engaged in no other business activities and has conducted its
operations only as contemplated hereby.
SECTION 4.10. TAX MATTERS. Neither Parent nor any of its affiliates
has taken or agreed to take any action (including in connection with the
Transactions) that would prevent the Merger from constituting a reorganization
qualifying under the provisions of Section 368(a) of the Code.
SECTION 4.11. LITIGATION. Except as disclosed in the Parent SEC
Reports or Section 4.11 of the Parent Disclosure Letter, there are no claims,
actions, suits, investigations or proceedings pending or, to the best knowledge
of Parent, threatened against Parent, before any court, arbitrator or
administrative, governmental or regulatory authority or body, domestic or
foreign, that, individually or in the aggregate, would, or would reasonably be
anticipated to, have a Parent Material Adverse Effect.
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SECTION 4.12. OWNERSHIP OF COMPANY COMMON STOCK. As of the date
hereof, Parent owns directly 42,480,143 shares of Company Class A Common Stock
and 53,302,401 shares of Company Class B Common Stock.
ARTICLE 5
CONDUCT AND TRANSACTIONS PRIOR TO
EFFECTIVE TIME; ADDITIONAL AGREEMENTS
SECTION 5.1. INFORMATION AND ACCESS. From the date of this Agreement
and continuing until the Effective Time, Parent, as to itself and Sub, on the
one hand, and the Company, as to itself and its subsidiaries, on the other hand,
each agrees that it shall afford and, with respect to clause (b) below, shall
cause its independent auditors to afford, (a) to the officers, independent
auditors, counsel and other representatives of the other reasonable access, upon
reasonable advance notice, to its (and in the case of Parent, Sub's, and in the
case of the Company, its subsidiaries') properties, books, records (including
tax returns filed and those in preparation) and executives and personnel in
order that the other may have a full opportunity to make such investigation as
it reasonably desires to make of the other consistent with their rights under
this Agreement, and (b) to the independent auditors of the other, reasonable
access to the audit work papers and other records of its independent auditors.
No investigation pursuant to this Section 5.1 shall affect or otherwise obviate
or diminish any representations and warranties of any party or conditions to the
obligations of any party. No party shall be required to provide access to or to
disclose information where such access or disclosure would violate or prejudice
the rights of its customers, jeopardize the attorney-client privilege or the
institution in possession or control of such information or contravene any law,
rule, regulations, order, judgment, decree, fiduciary duty or binding agreement
entered into prior to the date of this Agreement. The parties hereto will make
appropriate substitute disclosure arrangements under circumstances in which the
restrictions of the preceding sentence apply.
SECTION 5.2. CONDUCT OF BUSINESS OF THE COMPANY. Except as
contemplated by this Agreement (including Section 5.2 of the Company Disclosure
Letter) or with respect to Approved Matters, during the period from the date of
this Agreement and continuing until the Effective Time or until the termination
of this Agreement pursuant to Section 7.1, (a) the Company and its subsidiaries
shall conduct their respective businesses in the ordinary and usual course
consistent with past practice, including, without limitation, consulting with,
advising and obtaining the approval of Parent, in each case consistent with past
practice, and (b) without limiting the provisions of clause (a) in this
paragraph, neither the Company nor any of its subsidiaries shall without the
prior written consent of Parent (or, to the extent consistent with past practice
with regard to the matter at issue, the prior oral consent of Parent):
(i) declare, set aside or pay any dividends on or make any other
distribution in respect of any of its capital stock, except dividends or
distributions declared and paid by a wholly owned subsidiary of the Company
only to the Company or another wholly owned subsidiary of the Company;
(ii) split, combine or reclassify any of its capital stock or
issue or authorize or propose the issuance or authorization of any other
securities in respect of, in
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lieu of, or in substitution for shares of its capital stock or repurchase,
redeem or otherwise acquire any shares of its capital stock;
(iii) issue, deliver, pledge, encumber or sell, or authorize or
propose the issuance, delivery, pledge, encumbrance or sale of, or purchase
or propose the purchase of, any shares of its capital stock or securities
convertible into, or rights, warrants or options to acquire, any such
shares of capital stock or other convertible securities (other than the
issuance of such capital stock to the Company or a wholly owned subsidiary
of the Company, or upon the exercise or conversion of outstanding options
or warrants in accordance with the Stock Plan in effect on the date of this
Agreement or other convertible or exchangeable securities outstanding on
the date hereof, in each case in accordance with its present terms),
authorize or propose any change in its equity capitalization, or amend any
of the financial or other economic terms of such securities or the
financial or other economic terms of any agreement relating to such
securities;
(iv) amend its Certificate of Incorporation, Bylaws or other
organizational documents in any manner;
(v) take any action that would reasonably be expected to result
in any of the conditions to the Transactions set forth in Article 6 not
being satisfied;
(vi) merge or consolidate with any other person, or acquire any
assets or capital stock of any other person, other than acquisitions of
assets in the ordinary course of business, such as for inventory or
relating to the ordinary operations of the Company;
(vii) incur any indebtedness for money borrowed or guarantee any
such indebtedness of another person or increase indebtedness for money
borrowed outstanding under any current agreement relating to indebtedness
for money borrowed, or as disclosed on Section 5.2 of the Company
Disclosure Letter, in each case in the ordinary course of business;
(viii) make or authorize any capital expenditures of the Company
and its subsidiaries taken as a whole, other than capital expenditures
permitted pursuant to Section 5.2 of Company Disclosure Letter and other
than capital expenditures that are part of the Company's then existing
budget, which has previously been approved by the Company and Parent in the
ordinary course;
(ix) except as may be required by changes in applicable law or
GAAP, change any method, practice or principle of accounting;
(x) enter into any new employment agreements, or increase the
compensation of any officer or director of the Company or any senior
executive of any of its subsidiaries or operating units (including entering
into any bonus, severance, change of control, termination,
reduction-in-force or consulting agreement or other employee benefits
arrangement or agreement pursuant to which such person has the right to any
form of compensation from the Company or any of its subsidiaries), other
than as required by law or by written agreements in effect on the date
hereof with such person, or
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otherwise amend in any material respect any existing agreements with any
such person or use its discretion to amend any Company Benefit Plan or
accelerate the vesting or any payment under any Company Benefit Plan;
(xi) enter into any transaction with any officer or director of
the Company or any senior executive of any of its subsidiaries or operating
units, other than as provided for in the terms of any agreement in effect
on or prior to the date hereof and described in the Company Disclosure
Letter;
(xii) settle or otherwise compromise any material litigation,
arbitration or other judicial or administrative dispute or proceeding
relating to the Company or any of its subsidiaries; or
(xiii) authorize or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
SECTION 5.3. CONDUCT OF BUSINESS OF PARENT. Except as contemplated by
this Agreement (including the Parent Disclosure Letter), and agreements
described in the Parent Proxy Statement, during the period from the date of this
Agreement and continuing until the Effective Time or until the termination of
this Agreement pursuant to Section 7.1, Parent shall not, without the prior
written consent of the Company, take any action that would reasonably be
expected to result in any of the conditions to the Transactions set forth in
Article 6 not being satisfied.
SECTION 5.4. PREPARATION OF S-4 AND INFORMATION STATEMENT; OTHER
FILINGS. As promptly as practicable after the date of this Agreement, Parent and
the Company shall prepare, and Parent and Sub shall file with the SEC, a
preliminary information statement, in form and substance reasonably satisfactory
to each of Parent and the Company, and Parent shall prepare and file with the
SEC the S-4, in which the preliminary information statement (or portion thereof)
will be included as part of a prospectus. Each of Parent and the Company shall
use its reasonable best efforts to respond to any comments of the SEC, to have
the S-4 declared effective under the Securities Act as promptly as practicable
after such filing and to cause the information statement in definitive form (the
"Information Statement") to be mailed to the Company's stockholders at the
earliest practicable time after the S-4 is declared effective under the
Securities Act. As promptly as practicable after the date of this Agreement,
Parent and the Company shall prepare and file any other filings required under
the Exchange Act, the Securities Act or any other federal laws relating to the
Transactions (the "Other Filings"). The Company and Parent will notify the other
party promptly of the receipt of any comments, whether oral or written, from the
SEC or its staff and of any request by the SEC or its staff or any other
government officials for amendments or supplements to the S-4 or the Information
Statement or any Other Filing or for additional information, and will supply the
other with copies of all correspondence between it or any of its
representatives, on the one hand, and the SEC, or its staff or any other
government officials, on the other hand, with respect to the S-4, the
Information Statement or the Merger. The Information Statement and the S-4 shall
comply in all material respects with all applicable requirements of law. No
amendment or supplement to the Information Statement or S-4 will be made by the
Company or Parent without the prior approval of the other party, except as
required by applicable laws and then only to the extent necessary, or
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without providing the other party the opportunity to review and comment thereon.
Parent shall advise the Company, promptly after it receives notice thereof, of
the time when the S-4 has been declared effective, the issuance of any stop
order, or the suspension of the qualification of Parent Common Stock issuable in
connection with the Merger for offering or sale in any jurisdiction. If, at any
time prior to the Effective Time, any information relating to the Company or
Parent, or any of their respective affiliates, officers or directors should be
discovered by the Company or Parent which should be set forth in an amendment or
supplement to any of the S-4, the Information Statement or any Other Filing so
that any of such documents would not include any misstatement of a material fact
or omit to state any material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading, or an
event occurs which is required to be set forth in an amendment or supplement to
the Information Statement, the S-4 or any Other Filing, the party that discovers
such information shall promptly notify the other party and an amendment or
supplement describing such information shall be promptly filed with the SEC and,
to the extent required by law, disseminated to the Company's stockholders. The
Information Statement shall include, subject to applicable fiduciary duties
(based on advice of outside counsel to the Special Committee), the
recommendations of the Board of Directors of the Company in favor of approval of
this Agreement and the Transactions; PROVIDED that the Board of Directors of the
Company will not recommend approval of this Agreement and the Transactions
without the recommendation of the Special Committee. In the event that a meeting
of stockholders of the Company is required in connection with the Transactions,
the Company shall call and convene such meeting at the earliest practicable date
following the date hereof. The Company and Parent each shall promptly provide
the other (or its counsel) copies of all filings made by it with any
Governmental Entity in connection with this Agreement and the Transactions.
SECTION 5.5. WRITTEN CONSENT. Parent agrees that concurrent with the
execution and delivery of this Agreement, it shall deliver to the Company a duly
executed written consent with respect to all shares of the Company owned by it
adopting the Agreement as approved by the Board of Directors of the Company. If
this Agreement is subsequently amended and such amendment is approved by the
Board of Directors of Parent and the Company or if a subsequent consent is
deemed necessary to consummate the Transactions contemplated by this Agreement,
then Parent shall as soon thereafter as practicable either (a) execute and
deliver a written consent with respect to all shares of Common Stock owned
directly or indirectly by it on the date hereof adopting this Agreement, or (b)
at a meeting of the Company's stockholders at which any proposal to adopt the
Merger Agreement is proposed, cause all shares of Common Stock owned directly or
indirectly by it on the date hereof (i) to appear, in person or by proxy, so
that all such shares are counted for the purpose of obtaining a quorum at any
such meeting of stockholders of the Company, and at any adjournment or
adjournments thereof, and (ii) to vote, in person or by proxy, with respect to
such shares to adopt this Agreement. Parent shall cause all shares of Common
Stock owned directly or indirectly by it on the date hereof to vote against, and
refrain from executing and delivering written consents in favor of, any proposal
that is contrary to the adoption of this Agreement and the Transactions
contemplated hereby. Following delivery of any written consent of Parent
contemplated by this Section 5.5, the Company shall provide to its stockholders
the notice required pursuant to Section 228(e) of the Delaware Statute.
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SECTION 5.6. AGREEMENTS TO TAKE REASONABLE ACTION.
(a) The parties shall take, and shall cause their respective
subsidiaries to take, all reasonable actions necessary to comply promptly with
all legal requirements which may be imposed on them with respect to the Merger
and shall take all reasonable actions necessary to cooperate promptly with and
furnish information to the other parties in connection with any such
requirements imposed upon them or any of their subsidiaries in connection with
the Merger. Each party shall take, and shall cause its subsidiaries to take, all
reasonable actions necessary (i) to obtain (and will take all reasonable actions
necessary to promptly cooperate with the other parties in obtaining) any
clearance, consent, authorization, order or approval of, or any exemption by,
any Governmental Entity, or other third party, required to be obtained or made
by it (or by the other parties or any of their respective subsidiaries) in
connection with the Transactions or the taking of any action contemplated by
this Agreement; (ii) to lift, rescind or mitigate the effect of any injunction
or restraining order or other order adversely affecting its ability to
consummate the Transactions; (iii) to fulfill all conditions applicable to the
parties pursuant to this Agreement; (iv) to prevent, with respect to a
threatened or pending temporary, preliminary or permanent injunction or other
order, decree or ruling or statute, rule, regulation or executive order, the
entry, enactment or promulgation thereof, as the case may be; (v) to defend any
lawsuit or other legal proceeding, whether judicial or administrative,
challenging the Agreement, the consummation of the Transactions or the terms
thereof; and (vi) to execute and deliver any additional agreements or
instruments necessary to consummate the Transactions and fully carry out the
purposes of the Agreement PROVIDED, HOWEVER, that with respect to clauses (i)
through (vi) above, the parties will take only such curative measures (such as
licensing and divestiture) as the parties determine to be reasonable.
(b) Subject to the terms and conditions of this Agreement, each of the
parties shall use all reasonable efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
as promptly as practicable the Merger, subject to the appropriate approval of
the stockholders of the Company.
SECTION 5.7. CONSENTS. Parent, Sub and the Company shall each use all
reasonable efforts to obtain the consent and approval of, or effect the
notification of or filing with, each person or authority whose consent or
approval is required in order to permit the consummation of the Merger and to
enable the Surviving Corporation to conduct and operate the business of the
Company and its subsidiaries substantially as presently conducted and as
contemplated to be conducted.
SECTION 5.8. NASDAQ QUOTATION. Parent shall use its reasonable best
efforts to cause the shares of Parent Common Stock issuable to the stockholders
of the Company in the Merger (including the shares of Parent Common Stock
reserved for issuance with respect to Company Options) to be eligible for
quotation on the NASD National Market (or other national market or exchange on
which Parent Common Stock is then traded or quoted) prior to the Effective Time.
SECTION 5.9. AFFILIATES. At least ten Business Days prior to the
anticipated Closing Date, the Company shall deliver to Parent a list of names
and addresses of those persons
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who, at the Closing Date, would be "affiliates" of the Company within the
meaning of Rule 145 under the Securities Act. The Company shall use its
reasonable efforts to deliver or cause to be delivered to Parent, prior to the
Effective Time, from each of the affiliates of the Company identified in the
foregoing list, agreements substantially in the form attached to this Agreement
as EXHIBIT C.
SECTION 5.10. INDEMNIFICATION. (a) Parent shall cause the Surviving
Corporation to maintain in effect for the benefit of individuals who at or prior
to the Effective Time were directors or officers of the Company the current
provisions regarding indemnification and exculpation of officers and directors
(including with respect to advancement of expenses) contained in the Certificate
of Incorporation and Bylaws of the Company on the date hereof, which provisions
shall not be amended, modified or otherwise repealed for a period of six (6)
years from the Effective Time in any manner that would adversely affect the
rights thereunder as of the Effective Time of such individuals, unless such
modification is required after the Effective Time by applicable law and then
only to the minimum extent required by such applicable law or except to make
changes permitted by applicable law that would enlarge the exculpation or rights
of indemnification thereunder; PROVIDED, HOWEVER, that if any claims are
asserted or made within such six-year period, all rights to indemnification (and
to advancement of expenses) hereunder in respect of such claims shall continue,
without diminution, until disposition of all such claims.
(b) The Surviving Corporation shall (and Parent shall cause the
Surviving Corporation to), to the maximum extent permitted under applicable law,
provide to the current directors and officers of the Company the maximum
indemnification protection (including with respect to advancement of expenses,
including advancing expenses as incurred) permitted under the Delaware Statute
for a period of six (6) years after the Effective Time; PROVIDED, HOWEVER, that
if any claims are asserted or made within such six-year period, all rights to
indemnification (and to advancement of expenses) hereunder in respect of such
claims shall continue, without diminution, until disposition of all such claims.
(c) The Surviving Corporation shall (and Parent shall cause the
Surviving Corporation to) assume, honor and fulfill in all respects the
obligations of the Company pursuant to any indemnification agreements, including
those contained in employment agreements (the employee parties under such
agreements being referred to as the "Covered Persons") with the Company's
directors, officers and other employees (if any) existing at the Effective Time.
In addition, Parent shall provide, or cause the Surviving Corporation to
provide, for a period of not less than six (6) years after the Effective Time,
the Company's current and former directors and officers who are currently
covered by the Company's existing insurance and indemnification policy with an
insurance and indemnification policy (including, without limitation, by
arranging for run-off coverage, if necessary) that provides coverage for events
occurring at or prior to the Effective Time (the "D&O Insurance") that is no
less favorable than the existing policy (it being acknowledged and understood
that the Company currently self-insures for legally indemnifiable claims and
maintains liability insurance solely for claims not so indemnifiable or in
circumstances in which the Company cannot provide indemnification), or, if
substantially equivalent insurance coverage is unavailable, the most
advantageous D&O Insurance obtainable for an annual premium equal to 200% of the
annual premium currently in place for the Company for such insurance; PROVIDED,
HOWEVER, that Parent and the Surviving Corporation shall not be required to pay
an annual premium for the D&O Insurance in excess of 200% of the annual
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premium currently in place for the Company for such insurance, calculated on the
basis of a fair allocation of the portion of such premium if Parent arranges
such coverage on a group basis.
(d) This Section 5.10 shall survive the Effective Time, is intended to
benefit the Surviving Corporation, the Indemnified Parties and the Covered
Persons and shall be enforceable by the Indemnified Parties and the Covered
Persons, their heirs, assigns and representatives and are in addition to, and
not in substitution for, any other rights to indemnification or contribution
that any such person may have by contract or otherwise. In the event the
Corporation or any of its successors or assigns (i) consolidates with or merges
into any other person and shall not be the continuing or surviving corporation
or entity of such consolidation or merger, or (ii) transfers or conveys all or
substantially all of its properties and assets to any person, then, and in each
such case, proper provision shall be made so that the successors and assigns of
the Surviving Corporation, or at Parent's option, Parent, shall assume the
obligations set forth in this Section 5.10.
SECTION 5.11. NOTIFICATION OF CERTAIN MATTERS. Each of the Company,
Parent and Sub shall give prompt notice to the other such parties of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be likely to cause (a) any representation or warranty contained in
this Agreement to be untrue or inaccurate in any material respect at any time
from the date of this Agreement to the Effective Time, or (b) any material
failure of the Company, Parent, or Sub as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Notwithstanding the foregoing, the delivery of any notice pursuant to
this Section 5.11 shall not limit or otherwise affect the remedies available
hereunder to the party receiving such notice.
SECTION 5.12. EMPLOYEE AGREEMENTS. From and after the Effective Time,
Parent shall cause the Surviving Corporation to fulfill all written employment,
severance, termination, consulting and retirement agreements, as in effect on
the date hereof, to which the Company or any of its subsidiaries is a party,
pursuant to the terms thereof and applicable law.
SECTION 5.13. REORGANIZATION. From and after the date hereof, each of
Parent and the Company and their respective subsidiaries shall not, and shall
use reasonable efforts to cause their affiliates not to, take any action, or
fail to take any action, that would jeopardize qualification of the Merger as a
reorganization within the meaning of Section 368(a) of the Code or enter into
any contract, agreement, commitment or arrangement that would have such effect.
SECTION 5.14. PUBLIC ANNOUNCEMENTS. The initial press release relating
to the Transactions shall be a joint press release, to be agreed upon by the
Parent and the Company. Thereafter, Parent and the Company shall use their
reasonable efforts to consult with each other before issuing any press release
with respect to this Agreement or the Transactions.
SECTION 5.15. STOCKHOLDER LITIGATION. Each of the Company and the
Parent shall give the other the reasonable opportunity to participate in the
defense of any stockholder litigation against the Company or the Parent and
their respective directors and officers, as applicable, relating to the
Transactions or this Agreement.
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SECTION 5.16. SECTION 16B-3. Parent, Sub and the Company shall take
all reasonable steps to cause the transactions contemplated by Section 2.3 and
any other disposition of equity securities of the Company (including derivative
securities) or acquisitions of equity securities of Parent by each individual
who (a) is a director or officer of the Company, or (b) at the Effective Time
will become a director or officer of Parent, to be exempt under Rule 16b-3
promulgated under the Exchange Act.
ARTICLE 6
CONDITIONS PRECEDENT
SECTION 6.1. CONDITIONS TO EACH PARTY'S OBLIGATION TO EFFECT THE
MERGER. The respective obligations of each party to effect the Merger are
subject to the satisfaction prior to the Closing Date of the following
conditions:
(a) INFORMATION STATEMENT. Twenty (20) calendar days shall have
elapsed from the mailing of the Information Statement to the Company's
stockholders.
(b) EFFECTIVENESS OF THE S-4. The S-4 shall have been declared
effective by the SEC under the Securities Act and shall not be the subject
of any stop order or proceeding by the SEC seeking a stop order.
(c) GOVERNMENTAL ENTITY APPROVALS. All other material authorizations,
consents, orders or approvals of, or declarations or filings with, or
expiration of waiting periods imposed by, any Governmental Entity necessary
for the consummation of the Merger shall have been filed, expired or been
obtained, other than those that, individually or in the aggregate, the
failure to be filed, expired or obtained would not, in the reasonable
opinion of Parent, have a Parent Material Adverse Effect or a Company
Material Adverse Effect.
(d) NO INJUNCTIONS OR RESTRAINTS; ILLEGALITY. No temporary restraining
order, preliminary or permanent injunction or other order issued by any
court of competent jurisdiction or other legal restraint or prohibition
preventing the consummation of the Transactions shall be in effect, nor
shall any proceeding brought by an administrative agency or commission or
other governmental authority or instrumentality, domestic or foreign,
seeking any of the foregoing be pending or threatened; and there shall not
be any action taken, or any statute, rule, regulation or order (whether
temporary, preliminary or permanent) enacted, entered or enforced which
makes the consummation of the Transactions illegal or prevents or prohibits
the Transactions.
(e) NASDAQ QUOTATION. The shares of Parent Common Stock issuable to
the holders of the Company Common Stock pursuant to the Merger (including
the shares of Parent Common Stock reserved for issuance with respect to
Company Options) shall have been authorized for quotation on the NASD
National Market (or other national market or exchange on which Parent
Common Stock is then traded or quoted), upon official notice of issuance.
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SECTION 6.2. CONDITIONS OF OBLIGATIONS OF PARENT AND SUB. The
obligations of Parent and Sub to effect the Merger are subject to the
satisfaction of the following additional conditions, unless waived in writing by
Parent:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of the Company set forth in Section 3.7 shall be true and
correct as of the Closing Date as if made on such date, (ii) except to the
extent that the failure of the representations and warranties of the
Company set forth in this Agreement to be true and correct, in the
aggregate, would not have a Company Material Adverse Effect, the
representations and warranties of the Company made in this Agreement,
without regard to any materiality or "Material Adverse Effect"
qualification, shall be true and correct as of the date hereof, and (iii)
Parent shall have received a certificate signed by a senior executive
officer of the Company certifying the fulfillment of the conditions set
forth in clauses (i) and (ii) of this Section 6.2(a).
(b) PERFORMANCE OF OBLIGATIONS OF THE COMPANY. The Company shall have
performed in all material respects all of its obligations and covenants,
taken as a whole, required to be performed by it under this Agreement prior
to or as of the Closing Date, and Parent shall have received a certificate
to such effect signed by a senior executive officer of the Company.
(c) TAX OPINION. Parent and Sub shall have received the opinion, dated
the Closing Date, of Wachtell, Lipton, Rosen & Katz, special counsel to
Parent, based upon customary representations, to the effect that (i) the
Merger will be treated for federal income tax purposes as a reorganization
within the meaning of Section 368(a) of the Code, and that each of the
Company, Sub and Parent will be a party to that reorganization within the
meaning of Section 368(b) of the Code, and (ii) no taxable gain or loss
will be recognized, for federal income tax purposes, by stockholders of the
Company who exchange Company Common Stock for shares of Parent Common Stock
pursuant to the Merger (except with respect to cash received in lieu of
fractional shares).
SECTION 6.3. CONDITIONS OF OBLIGATIONS OF THE COMPANY. The obligation
of the Company to effect the Merger is subject to the satisfaction of the
following conditions, unless waived in writing by the Company:
(a) REPRESENTATIONS AND WARRANTIES. (i) The representations and
warranties of Parent set forth in Section 4.7 shall be true and correct as
of the Closing Date as if made on such date, (ii) except to the extent that
the failure of the representations and warranties of Parent and Sub set
forth in this Agreement to be true and correct, in the aggregate, would not
have a Parent Material Adverse Effect, the representations and warranties
of Parent and Sub made in this Agreement, without regard to any materiality
or "Material Adverse Effect" qualification, shall be true and correct as of
the date hereof, and (iii) the Company shall have received a certificate
signed by a senior executive officer of Parent certifying the fulfillment
of the conditions set forth in clauses (i) and (ii) of this Section 6.2(a)
with respect to Parent matters and the Company shall have received a
certificate signed by a senior executive officer of Sub certifying the
fulfillment of the condition set forth in clauses (ii) of this Section
6.2(a) with respect to Sub matters.
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(b) PERFORMANCE OF OBLIGATIONS OF PARENT AND SUB. Each of Parent and
Sub shall have performed in all material respects all of their respective
obligations and covenants, taken as a whole, required to be performed by
such party under this Agreement prior to or as of the Closing Date, and the
Company shall have received certificates to such effect signed by a senior
executive officer of Parent with respect to Parent matters and of Sub with
respect to Sub matters.
(c) TAX OPINION. The Company shall have received the opinion, dated
the Closing Date, of Mintz Levin Cohn Ferris Glovsky and Popeo, PC, special
counsel to the Company, based upon customary representations, to the effect
that (i) the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, and that
each of the Company, Sub and Parent will be a party to that reorganization
within the meaning of Section 368(b) of the Code, and (ii) no taxable gain
or loss will be recognized, for federal income tax purposes, by
stockholders of the Company who exchange Company Common Stock for shares of
Parent Common Stock pursuant to the Merger (except with respect to cash
received in lieu of fractional shares).
ARTICLE 7
TERMINATION
SECTION 7.1. TERMINATION. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
the Merger by the stockholders of the Company:
(a) by mutual written consent duly authorized by the Boards of
Directors of Parent and the Company based on the recommendation of the
Special Committee;
(b) by either Parent or the Company if the Merger shall not have been
consummated by June 30, 2003 (PROVIDED, that the right to terminate this
Agreement under this Section 7.1(b) shall not be available to any party
whose action or failure to act has been the cause of or resulted in the
failure of the Merger to occur on or before such date and such action or
failure to act constitutes a breach of this Agreement);
(c) by either Parent or the Company, if a court of competent
jurisdiction or other Governmental Entity shall have issued an order,
decree or ruling or taken any other action, in any case having the effect
of permanently restraining, enjoining or otherwise prohibiting the Merger,
which order, decree or ruling is final and nonappealable;
(d) by the Company, upon a breach of any representation, warranty,
covenant or agreement on the part of Parent set forth in this Agreement
such that the conditions set forth in Section 6.3(a) or Section 6.3(b)
shall have become incapable of fulfillment and such breach shall not have
been waived by Parent; or
(e) by Parent, upon a breach of any representation, warranty, covenant
or agreement on the part of the Company set forth in this Agreement such
that the conditions set forth in Section 6.2(a) or Section 6.2(b) shall
have become incapable of fulfillment and such breach shall not have been
waived by the Company.
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SECTION 7.2. EFFECT OF TERMINATION. In the event of the termination of
this Agreement as provided in Section 7.1, this Agreement shall be of no further
force or effect, except (a) as set forth in the last sentence of this Section
7.2, Section 7.3, and Article 8, each of which shall survive the termination of
this Agreement, and (b) nothing herein shall relieve any party from liability
for any breach of this Agreement.
SECTION 7.3. FEES AND EXPENSES. All fees and expenses incurred in
connection with this Agreement and the Transactions shall be paid by the party
incurring such expenses, whether or not the Merger is consummated.
ARTICLE 8
GENERAL PROVISIONS
SECTION 8.1. AMENDMENT. This Agreement (including the Exhibits and
disclosure letters hereto) may be amended prior to the Effective Time by Parent
and the Company, by action taken by the Board of Directors of Parent and the
Board of Directors of the Company (PROVIDED, that no amendment shall be approved
by the Board of Directors of the Company unless such amendment shall have been
recommended by the Special Committee and, if required by law, approved by the
disinterested directors of the Company), at any time before or after approval of
the Merger by the stockholders of the Company but, after any such approval, no
amendment shall be made which by law requires further approval by such
stockholders without such further approval. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties.
SECTION 8.2. EXTENSION; WAIVER. At any time prior to the Effective
Time (whether before or after approval of the stockholders of the Company),
Parent and the Company may (a) extend the time for the performance of any of the
obligations or other acts of the other parties, (b) waive any inaccuracies in
the representations and warranties contained in this Agreement or in any
document delivered pursuant to this Agreement and (c) waive compliance with any
of the agreements or conditions contained in this Agreement. Any extension or
waiver on behalf of the Company shall be taken only upon the recommendation of
the Special Committee (and, if required by law, by the disinterested directors
of the Company). Any agreement on the part of a party to any such extension or
waiver shall be valid only if set forth in an instrument in writing signed on
behalf of such party.
SECTION 8.3. NONSURVIVAL OF REPRESENTATIONS, WARRANTIES AND
AGREEMENTS. All representations, warranties and agreements in this Agreement or
in any instrument or certificate delivered pursuant to this Agreement shall be
deemed to be conditions to the Merger and shall not survive the Merger, except
for the agreements contained in Sections 2.2 (Exchange of Certificates), 2.3
(Stock Compensation Awards), 2.4 (Further Assurances), 5.10 (Indemnification),
5.12 (Employee Agreements) and 5.13 (Reorganization), each of which shall
survive the Merger.
SECTION 8.4. ENTIRE AGREEMENT. This Agreement (including the Exhibits
and disclosure letters hereto) contains the entire agreement among all of the
parties with respect to the subject matter hereof and supersedes all prior
arrangements and understandings, both written
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and oral, with respect thereto, but shall not supersede any agreements among any
group of the parties hereto entered into on or after the date hereof.
SECTION 8.5. SEVERABILITY. It is the desire and intent of the parties
that the provisions of this Agreement be enforced to the fullest extent
permissible under the law and public policies applied in each jurisdiction in
which enforcement is sought. Accordingly, in the event that any provision of
this Agreement would be held in any jurisdiction to be invalid, prohibited or
unenforceable for any reason, such provision, as to such jurisdiction, shall be
ineffective, without invalidating the remaining provisions of this Agreement or
affecting the validity or enforceability of such provision in any other
jurisdiction. Notwithstanding the foregoing, if such provision could be more
narrowly drawn so as not to be invalid, prohibited or unenforceable in such
jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without
invalidating the remaining provisions of this Agreement or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 8.6. NOTICES. All notices and other communications pursuant to
this Agreement shall be in writing and shall be deemed to be sufficient if
contained in a written instrument and shall be deemed given if delivered
personally, telecopied, sent by nationally recognized, overnight courier or
mailed by registered or certified mail (return receipt requested), postage
prepaid, to the parties at the following addresses (or at such other address for
a party as shall be specified by like notice):
(a) if to Parent or Sub, to:
USA Interactive
152 West 57th Street
New York, NY 10019
Attention: General Counsel
Telecopier: (212) 314-7439
with a copy to:
Wachtell, Lipton, Rosen & Katz
51 West 52nd Street
New York, NY 10019
Attention: Pamela S. Seymon
Telecopier: (212) 403-2000
(b) if to the Company, to:
Ticketmaster
3701 Wilshire Boulevard
Los Angeles, CA 90010
Attention: General Counsel
Telecopier: (213) 382-2738
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with a copy to:
Mintz Levin Cohn Ferris Glovsky and Popeo, PC
1 Financial Center
Boston, MA 02111
Attention: Robert Popeo
Telecopier: (617) 542-2241
All such notices and other communications shall be deemed to have been received
(a) in the case of personal delivery, on the date of such delivery, (b) in the
case of a telecopy, when the party receiving such telecopy shall have confirmed
receipt of the communication, (c) in the case of delivery by nationally
recognized overnight courier, on the Business Day following dispatch and (d) in
the case of mailing, on the third Business Day following such mailing.
SECTION 8.7. HEADINGS; INTERPRETATION. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. As used in this Agreement,
"subsidiary" with respect to any person shall mean any entity which such person
has the ability to control the voting power thereof, either through ownership of
equity interests or otherwise, PROVIDED that under no circumstances shall the
Company and its subsidiaries be deemed to be subsidiaries of Parent.
SECTION 8.8. COUNTERPARTS. This Agreement may be executed in one or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when one or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood that
all parties need not sign the same counterpart.
SECTION 8.9. BENEFITS; ASSIGNMENT. This Agreement is not intended to
confer upon any person other than the parties any rights or remedies hereunder
and shall not be assigned by operation of law or otherwise; PROVIDED, HOWEVER,
that the officers and directors of the Company are intended beneficiaries of the
covenants and agreements contained in Section 5.10.
SECTION 8.10. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed therein, without giving effect to laws that
might otherwise govern under applicable principles of conflicts of law.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized, as of the date
first written above.
USA INTERACTIVE
By: /S/ Julius Genachowski
--------------------------------
Name: Julius Genachowski
Title: Executive Vice President
T MERGER CORP.
By: /S/ Julius Genachowski
--------------------------------
Name: Julius Genachowski
Title: Vice President
TICKETMASTER
By: /S/ John Pleasants
--------------------------------
Name: John Pleasants
Title: Chief Executive Officer
and President
[SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER]
Exhibit 99.1
[USA INTERACTIVE LOGO] [TICKETMASTER LOGO]
*SEE IMPORTANT NOTES AT END OF RELEASE
USA INTERACTIVE AND TICKETMASTER
ANNOUNCE MERGER AGREEMENT
USA ENDING PROCESSES TO ACQUIRE 100% OF EXPEDIA AND HOTELS.COM
New York, NY and Los Angeles, CA - October 10, 2002 -- USA Interactive (Nasdaq:
USAI) and Ticketmaster (Nasdaq: TMCS) announced today that they have entered
into an agreement by which Ticketmaster would be merged with USA. The agreement
followed the unanimous recommendation of an independent Special Committee of the
Ticketmaster Board. USA, which is now the controlling shareholder and majority
owner of Ticketmaster, would acquire all Ticketmaster shares that it does not
presently own in a tax-free transaction.
Under the agreement, Ticketmaster shareholders would receive 0.935 of a share of
USA common stock for each share of Ticketmaster common stock that they own.
Based on the closing prices on October 9, this transaction values each
outstanding share of Ticketmaster at $15.17. This reflects a premium of 19.8%
based on the 20-day average of the ratios of Ticketmaster to USA stock prices
leading up to the last trading date before USA announced on June 3 its intention
to commence an exchange offer; and a premium of 19.2% based on the 20-day
average of the ratios of Ticketmaster to USA stock prices leading up to the
close of the market on October 9. USA would issue to Ticketmaster public
shareholders approximately 45.1 million shares upon the closing of the
transaction, which is anticipated by the end of the year.
USA Interactive also announced today that it is ending the ongoing processes to
acquire all of the publicly held shares of Expedia, Inc. and Hotels.com that it
does not now own. Those processes began in connection with USA's announcement on
June 3 that it intended to commence exchange offers or pursue transactions to
acquire all of the publicly held shares of Expedia and Hotels.com, as well as
Ticketmaster.
Barry Diller, Chairman and Chief Executive Officer of USA Interactive, said:
"When we began the process four months ago, we had said our goal was to simplify
our capital structure and consolidate our business operations...bringing
Ticketmaster, Match.com and Citysearch fully into USA is a productive step in
that direction. While we would have liked to reach the same result with Expedia
and Hotels.com, and have had collegial and positive discussions with each of
their Special Committees, we are convinced no transaction will be consummated at
this time. We remain committed to the principle of
simplification, but we believe it's in everyone's best interest to end the
formal process and get on with operating the businesses without distraction. No
one, however, should mistake our actions as any lessening of enthusiasm in
Travel as a key part of our future - notwithstanding today's unstable
international climate - our faith in the growth of interactive travel services
over the long term is complete.
"Over the next months, as we bring the Ticketmaster companies fully into USA, we
plan to appoint senior executives at USA to oversee the three principal areas of
our Company: Travel, Information and Services, and Electronic Retailing. We have
10 operating units overall, including 4 travel related services. As the
controlling shareholder of these businesses we intend to do everything we can to
provide for closer coordination and cooperation between them so that each of
these businesses can grow dramatically without being impeded by a less than
cohesive ownership structure (of course respecting the minority shareholders of
each entity).
"As to the senior management of Ticketmaster, we have complete confidence in
Terry Barnes and John Pleasants, and commensurate senior roles for both are very
much in our plans for the merged company."
Alan Spoon, Chairman of the Special Committee of the Ticketmaster Board, said:
"We are enthusiastic about the transaction and the value created for our
minority shareholders."
USA currently owns approximately 66.5% of the outstanding Ticketmaster stock and
controls approximately 93% of the combined voting power of the outstanding
shares of Ticketmaster common stock. An Information Statement will be mailed to
Ticketmaster shareholders, and the transaction, which is subject to customary
conditions, is expected to be completed in the fourth quarter of 2002.
ABOUT USA INTERACTIVE
USA Interactive (Nasdaq: USAI), via the Internet, the television and the
telephone, engages worldwide in the business of interactivity across electronic
retailing, travel services, ticketing services, personals services, local
information services and teleservices. USA is comprised of HSN; Expedia, Inc.
(Nasdaq: EXPE); Hotels.com (Nasdaq: ROOM); Interval International; TV Travel
Group; Ticketmaster (Nasdaq: TMCS), which operates Match.com and Citysearch;
Precision Response Corporation; Electronic Commerce Solutions; and Styleclick,
Inc. (OTCBB: IBUYA).
ABOUT TICKETMASTER
Ticketmaster (NASDAQ: TMCS), the world's leading ticketing and access company,
sold 86.7 million tickets in 2001 valued at more than $3.6 billion, through
approximately 3,300 retail Ticket Center outlets; 20 worldwide telephone call
centers; and ticketmaster.com. Ticketmaster serves more than 7,000 clients
worldwide and acts as the exclusive ticketing service for hundreds of leading
arenas, stadiums, performing arts venues, and theaters and is the official
ticketing provider and supporter of the Athens 2004 Olympic Games. The Company
also operates Match.com, a leading subscription-based online dating site,
Citysearch, a leading online local network enabling people to get the most out
of their city, and ReserveAmerica, the number one access point for outdoor
recreation. Headquartered in Los Angeles, California, Ticketmaster is majority
owned by USA Interactive (NASDAQ: USAI).
SAFE HARBOR STATEMENT UNDER
THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
This press release contains "forward-looking statements" within the meaning of
the Private Securities Litigation Reform Act of 1995. These forward-looking
statements include statements relating to our anticipated financial performance,
business prospects, new developments, new merchandising strategies and similar
matters, and/or statements preceded by, followed by or that include the words
"believes," "could," "expects," "anticipates," "estimates," "intends," "plans,"
"projects," "seeks," or similar expressions. These forward-looking statements
are necessarily estimates reflecting the best judgment of our senior management
and involve a number of risks and uncertainties that could cause actual results
to differ materially from those suggested by the forward-looking statements.
These forward-looking statements are subject to risks, uncertainties and
assumptions that could have a material adverse effect on the proposed
transaction between USA and Ticketmaster and/or on our businesses, financial
condition or results of operations. You should understand that the following
important factors could affect our future results and could cause those results
to differ materially from those expressed in the forward-looking statements: (1)
the risk that USA's and Ticketmaster's businesses will not be integrated
successfully; (2) costs related to the proposed transaction; (3) material
adverse changes in economic conditions generally or in our markets or
industries; (4) future regulatory and legislative actions and conditions
affecting our operating areas; (5) competition from others; (6) successful
integration of our divisions' management structures; (7) product demand and
market acceptance; (8) the ability to protect proprietary information and
technology or to obtain necessary licenses on commercially reasonable terms; (9)
the ability to expand into and successfully operate in foreign markets; and (10)
obtaining and retaining skilled workers and key executives. In addition,
investors should consider the other information contained in or incorporated by
reference into USA's and Ticketmaster's filings with the U.S. Securities and
Exchange Commission (the "SEC"), including their Annual Reports on Form 10-K for
the fiscal year ended 2001, especially in the Management's Discussion and
Analysis section, their most recent Quarterly Reports on Form 10-Q and their
Current Reports on Form 8-K. Other unknown or unpredictable factors also could
have material adverse effects on our future results, performance or
achievements. In light of these risks, uncertainties, assumptions and factors,
the forward-looking events discussed in this press release may not occur. You
are cautioned not to place undue reliance on these forward-looking statements,
which speak only as of the date stated, or if no date is stated, as of the date
of this press release.
We are not under any obligation and do not intend to make publicly available any
update or other revisions to any of the forward-looking statements contained in
this press release to reflect circumstances existing after the date of this
press release or to reflect the
occurrence of future events even if experience or future events make it clear
that any expected results expressed or implied by those forward-looking
statements will not be realized.
ADDITIONAL INFORMATION AND WHERE TO FIND IT
In connection with the proposed transaction with Ticketmaster, USA will file a
registration statement with a prospectus, which also will contain an information
statement of Ticketmaster, with the SEC. INVESTORS AND SECURITY HOLDERS ARE
ADVISED TO READ THE PROSPECTUS AND INFORMATION STATEMENT CAREFULLY WHEN THEY
BECOME AVAILABLE BEFORE MAKING ANY INVESTMENT DECISION, BECAUSE THEY WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free
copies of the prospectus and information statement, once available, and other
documents filed by USA and Ticketmaster with the SEC, at the SEC's web site at
WWW.SEC.GOV. Free copies of the prospectus and information statement, once
available, and other filings made by USA or Ticketmaster with the SEC, may also
be obtained from USA by directing a request to USA Interactive, 152 West 57th
Street, New York, New York 10019, Attention: Investor Relations.
# # #
CONTACTS:
Ron Sato, USA Interactive Corporate Communications, 212/314-7254;
Roger Clark/Lauren Rosenfield, USA Interactive Investor Relations, 212/314-7400;
Kandus Simpson, Ticketmaster, 213/639-8821